Ford CEO predicts a prosperous future for the auto industry with ‘Pro’ business, urges Wall Street to disregard Tesla

Ford CEO Jim Farley is optimistic about the future of the auto industry and believes that investors should shift their focus from Tesla to Ford’s “Pro” fleet business. During a conference, Farley compared the success of Ford Pro to that of Deere & Co., stating that the unit’s pretax earnings doubled last year to $7.2 billion. He emphasized that Ford Pro has half a million subscribers with a 50% gross margin, making it a strong contender in the industry.

Ford Pro encompasses various aspects of Ford’s business, including traditional fleet and commercial operations, as well as emerging telematics, logistics, and other connective services for business customers. It also includes parts and services for businesses. Ford expects the unit’s earnings to increase to between $8 billion and $9 billion this year, surpassing the earnings expectations for its traditional business and projected losses in its Model e EV business.

In contrast, Tesla’s revenue and earnings from its premium driver-assistance software, known as Full Self-Driving Beta (FSD), are not broken down separately. However, many analysts speculate that Tesla’s FSD software could generate tens of billions of dollars per year by 2030. Despite this potential, Farley urges investors to focus on Ford Pro’s undervalued status within the company.

Wall Street analyst Adam Jonas from Morgan Stanley shares Farley’s sentiment, describing Ford Pro as Ford’s “Ferrari.” He compares it to the luxury sportscar manufacturer that was significantly undervalued before being spun out of Fiat Chrysler in 2016. Jonas believes that Ford Pro is being overlooked because its profits are being used to fund Ford’s electric vehicle (EV) projects.

However, some investors remain skeptical of Farley’s claims, noting that Ford has yet to become a significant competitor to Tesla in terms of vehicles and technologies. Ford has faced challenges in the EV market, including slower-than-expected adoption of its current models and significant losses on its electric vehicles. The company is currently focused on developing its next-generation EVs, which it promises will be profitable within a year of going on sale.

Despite these challenges, Farley remains confident in Ford Pro’s potential. He believes that while consumer demand for EVs may be slow, fleet customers are adopting all-electric vehicles faster than anticipated. Ford Pro is a crucial part of Farley’s “Ford+” restructuring and growth plan, led by Ted Cannis, who is highly regarded within the company.

In conclusion, Ford CEO Jim Farley predicts a prosperous future for the auto industry through Ford Pro, urging investors to shift their focus from Tesla. With impressive earnings and a strong subscriber base, Ford Pro has the potential to become a significant player in the industry. While some skepticism remains, Farley’s confidence in Ford Pro’s value and profitability showcases his determination to position Ford as a formidable competitor in the evolving automotive landscape.