Forget Tesla, the ‘Pro’ category is the future of the automotive industry

Forget Tesla, the ‘Pro’ category is the future of the automotive industry


Ford Motor Co. CEO Jim Farley gives a thumbs up before announcing Ford Motor will partner with Chinese company Amperex Technology to build an all-electric vehicle battery plant in Marshall, Michigan, during a press conference in Romulus, Michigan February. 13, 2023.

Rebecca Cook | Reuters

DETROIT – Ford Motor CEO Jim Farley Thursday urged Wall Street to forget about Tesla and its FSD driver assistance systems as the future of the automotive industry, arguing investors should instead focus on the Detroit company’s “Pro” fleet.

Farley compared the division, which nearly doubled pretax income last year to $7.2 billion, where Deere & Co. it was seven years ago. Shares of the farm equipment maker are up about 235% since then.

“If you’re looking for the future of the automotive industry, stop looking at FSD and Tesla. Check out the Ford Pro. It has half a million users with 50 percent of total revenue,” Farley said during the Wolfe Research conference.

Ford Pro is made up of traditional fleets for automakers and commercial businesses as well as telecommunications, equipment and other communications for business customers – from plumbers and electricians to large corporations. It also includes parts and business services.

Ford expects the Pro division’s preliminary revenue to increase to between $8 billion and $9 billion this year, the automaker said earlier this month. That compares with revenue expectations for the company’s traditional “Blue” 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 contribute revenue or revenue from its paid driver assistance software, marketed as its Full Self Driving Beta, FSD or FSD Beta. Many Wall Street analysts have speculated that such a program could bring in tens of billions of dollars a year by 2030.

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Shares of Ford Motor, Tesla and Deere & Co. for the past seven years

Ford has said it expects revenue from phone services and other non-traditional subscription services to grow to $2,000 per vehicle annually, or about $167 per month, for Ford Pro in the coming years. Farley reiterated Thursday that 20% of Pro’s total revenue is expected to come from such services by 2026.

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

Morgan Stanley’s Adam Jonas last week called the company’s Ford Pro “Ferrari,” referring to the highly profitable luxury car maker that was undervalued before it was spun off from Fiat Chrysler in 2016.

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

Jonas, a longtime Tesla bull, claimed that the business is being overlooked because profits from the business are siphoned off to fund Ford’s EV science project.

Farley said Thursday that while EV demand is slower than expected by consumers, fleet customers are adopting electric vehicles faster than the company expected.

Pro Operations is a key part of Farley’s “Ford+” restructuring and growth plan. This unit is headed by Ted Cannis, who is considered to be a successful person in the organization.

“We always had a very successful business … but there was no goal,” Farley said. “I think people are starting to see it.”