On Thursday, Ford Motor CEO Jim Farley urged Wall Street to shift its focus away from Tesla and its Full Self-Driving (FSD) driver-assistance systems and instead concentrate on Ford’s “Pro” fleet business.
Farley drew a comparison between Ford Pro and Deere & Co.’s performance seven years ago, noting that Deere’s stock has surged approximately 235% since then.
He emphasized that investors should look at Ford Pro’s potential, highlighting that the unit nearly doubled its pretax earnings last year to $7.2 billion.
“If you’re interested in the future of the automotive industry, stop focusing on FSD and Tesla. Pay attention to Ford Pro. It has half a million subscribers and boasts a 50% gross margin,” Farley stated during a Wolfe Research conference.
Ford Pro encompasses the automaker’s traditional fleet and commercial operations, as well as emerging telematics, logistics, and other connectivity services for business clients—from small local tradespeople to large corporations. It also includes parts and services tailored for businesses.
Ford anticipates that the Pro unit’s pretax earnings will rise to between $8 billion and $9 billion this year, as announced earlier this month
This forecast contrasts with the expected earnings for the company’s “Blue” traditional business, estimated at around $7 billion to $7.5 billion, and projected losses of $5 billion to $5.5 billion for its Model e EV business.
Tesla does not separate revenue or earnings from its premium driver-assistance software, known as Full Self-Driving Beta (FSD or FSD Beta). Many Wall Street analysts have speculated that this software could generate tens of billions of dollars annually by 2030.
Ford projects that revenue from telematics and other nontraditional subscription services for Ford Pro could reach $2,000 per vehicle annually, or approximately $167 a month, in the coming years. Farley reiterated that 20% of Pro’s total revenue is expected to come from these services by 2026.
Farley also stressed that Ford Pro is undervalued within the company. Some Wall Street analysts share this view. Last week, Morgan Stanley’s Adam Jonas referred to Ford Pro as the company’s “Ferrari,” likening it to the highly profitable luxury sports car manufacturer that was undervalued before its separation from Fiat Chrysler in 2016.
“I recall when Fiat owned Ferrari, and I valued it at around $4 billion. Today, Ferrari is worth $80 billion, and the business was largely ignored by investors when it was part of Fiat,” Jonas said during Ford’s quarterly earnings call earlier this month. “Now Ford has its own Ferrari, called Ford Pro. And it seems people are overlooking this cash cow.”
Jonas, a long-time supporter of Tesla, argued that Ford Pro’s profits are being redirected to support Ford’s “EV science project,” leading to its undervaluation.
Some investors might be skeptical of Farley’s remarks. While Farley has previously positioned Ford as a growing competitor to Tesla, this has yet to fully materialize.
Ford is currently delaying or reducing its investment in EVs, including domestic battery production, due to slower-than-expected adoption of its current models and substantial losses in its electric vehicle segment.
The company is working on next-generation EVs that it promises will be profitable within a year of their market introduction.
Farley noted that although consumer demand for EVs is slower than anticipated, fleet customers are adopting all-electric vehicles more rapidly than Ford had expected.
Ford Pro is a crucial component of Farley’s “Ford+” restructuring and growth strategy, led by Ted Cannis, who is recognized for his success within the company.
“We always had a very successful pro-business, but it lacked focus,” Farley said. “I think people are just starting to recognize its potential.”
