Ford CEO tells Wall Street to forget Tesla, says ‘Pro’ business is the future of the auto industry

DETROIT
–


Ford
Motor
CEO
Jim
Farley
on
Thursday
urged
Wall
Street
to
forget
about


Tesla
and
its
FSD
driver-assistance
systems
as
the
future
of
the
auto
industry,
contending
investors
should
instead
focus
on
the
Detroit
automaker’s
“Pro”
fleet
business.

Farley
compared
the
unit,
which
roughly
doubled
pretax
earnings
last
year
to
$7.2
billion,
to
where


Deere
&
Co.
was
seven
years
ago.
The
farm
equipment
maker’s
stock
has
increased
by
about
235%
since
then.

“If
you’re
looking
for
the
future
of
the
automotive
industry,
stop
looking
at
FSD
and


Tesla.
Look
at
Ford
Pro.
It’s
got
half
a
million
subscribers
with
50%
gross
margin,”
Farley
said
during
a
Wolfe
Research
conference.

Ford
Pro
is
made
up
of
the
automaker’s
traditional
fleet
and
commercial
businesses
as
well
as
emerging
telematics,
logistics
and
other
connective
operations
for
business
customers
–
ranging
from
local
plumbers
and
electricians
to
massive
corporations.
It
also
includes
parts
and
services
for
businesses.

Ford
expects
the
Pro
unit’s

pretax
earnings
to
increase
to
between
$8
billion
and
$9
billion
this
year,
the
automaker
said
earlier
this
month.
That
compares
with
earnings
expectations
for
the
company’s
“Blue”
traditional
business
of
about
$7
billion
to
$7.5
billion
and
projected
losses
in
its
Model
e
EV
business
of
$5
billion
to
$5.5
billion.

Tesla
does
not
break
out
revenue
or
earnings
from
its
premium
driver-assistance
software,
marketed
as
its
Full
Self-Driving
Beta,
FSD
or
FSD
Beta.
Many
Wall
Street
analysts
have
speculated
that
such
software
could
bring
in
tens
of
billions
of
dollars
per
year
by
2030.

Ford
has
said
it
expects
revenue
from
telematics
and
other
nontraditional
subscription
services
to
increase
to
$2,000
per
vehicle
annually,
or
about
$167
a
month,
for
Ford
Pro
in
the
years
ahead.
Farley
reiterated
Thursday
that
20%
of
Pro’s
overall
revenue
is
expected
to
come
from
such
services
by
2026.

Farley
reiterated
that
Ford
Pro
is
undervalued
within
the
automaker.
Some
on
Wall
Street
agree.

Morgan
Stanley’s
Adam
Jonas
last
week
called
Ford
Pro
the
company’s
“Ferrari,”
referring
to
the
extremely
profitable
luxury
sportscar
manufacturer
that
was
significantly
undervalued
before
being
spun
out
of
Fiat
Chrysler
in
2016.

“I
remember
a
time
when
Fiat
owned
Ferrari,
and
I
had
a
valuation
of
about
$4
billion
on
it.
Now
Ferrari
is
worth
$80
billion
today,
and
the
business
was
totally
ignored
by
investors
when
it
was
part
of
Fiat,”
Jonas
said
during
Ford’s
quarterly
earnings
call
earlier
this
month.
“Now
Ford
has
a
Ferrari,
it’s
called
Ford
Pro.
And
I
think
we
agree,
people
are
ignoring
the
cash
cow.”

Jonas,
a
longtime
Tesla
bull,
contended
the
business
is
being
overlooked
because
profits
from
it
are
being
siphoned
to
fund
Ford’s
“EV
science
project.”

Some
investors
may
be
skeptical
of
Farley’s
comments.
The
Ford
executive
has
previously
discussed
Ford
being
a
growing
competitor
to
Tesla
with
its
vehicles
and
technologies,
but
that,
in
general,
has
largely
not
occurred
yet.

Ford
is

delaying
or
cutting
spending
by
billions
of
dollars
on
EVs,
including
domestic
battery
production,
amid
slower-than-expected
adoption
of
its
current
models
as
well
as
significant
losses
on
its
electric
vehicles.
The
company
is
in
the
middle
of
developing
its
next-generation
EVs
that
it
promises
will
be
profitable
within
a
year
of
going
on
sale.

Farley
said
Thursday
that
while
EV
demand
is
slower
than
expected
for
consumers,
fleet
customers
are
actually
adopting
all-electric
vehicles
faster
than
the
company
had
anticipated.

The
Pro
operations
are
a
major
part
of
Farley’s

“Ford+”
restructuring
and
growth
plan.
The
unit
is
led

by
Ted
Cannis,
who
is
considered
a
successful
utility
man
within
the
company.

“We
always
had
a
super
successful
pro-business
…
but
there
was
no
focus
on
it,”
Farley
said.
“I
think
people
are
just
starting
to
see
[it].”

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