Two Takeaways from Ford CEO Jim Farley That Boost Confidence

Ford CEO, Jim Farley, covered a variety of topics Thursday, ranging from hybrid and electric vehicles to the automaker’s approach to international competitors.

His remarks at a Wolfe Research investor conference left us optimistic about Ford’s prospects. Wall Street seemed to share this sentiment, driving Club stock up more than 2% in afternoon trading.

Farley expressed confidence in the future of Ford’s Pro business, which consists of commercial fleet vehicles along with software and services for businesses.

He also emphasized that prioritizing hybrids will be a critical strategy for mitigating losses from electric vehicles. According to Farley, hybrids have the potential to appeal to customers who are hesitant about EVs but desire enhanced fuel efficiency.

CEO of Ford
CEO Jim Farley is bullish on Ford Pro’s future. (Credits: Fortune)

“If you’re looking for the future of the automotive industry stop looking at FDS [full self-driving] and Tesla, look at Ford Pro,” Farley said. “We haven’t gotten to the top in Pro yet.”

The CEO pointed to the business’ half a million subscribers that bring in 50% gross margin, multiyear order banks, and the fact that they are at max capacity in all Pro vehicle lines due to “huge pent-up demand” in the U.S. and Europe.

The transformation of Pro, Farley said, has been a notable success for the company. “We always had a super successful Pro business … but there was no focus on it.”

Despite Ford Pro’s success, the company still faces losses in its Model E segment, dedicated to electric vehicles (EVs).

Ford Model E Segmant
The Ford Model E segment has bought in losses for the company (Credits: Ford)

The transition from gas to electric has been slow as customers exhibit hesitation. However, Ford’s advantage lies in its popular and higher-margin hybrid vehicles. There’s a call for the automaker to prioritize the development of hybrids.

“Customers don’t have to change their habits on hybrids and they can immediately do the math on the efficiency of the fuel economy,” Farley said.

“The math on EVs is more complicated” since customers question what the energy cost savings are compared with gasoline, he added. The economics of owning an EV can be “opaque for someone who hasn’t driven an electric car.”

Farley said that success in EVs is being able to compete with Chinese automakers whose vehicles have saturated the market in China and Europe.

Chinese competitors include Nio, Li Auto, and BYD, still a small position in Warren Buffett’s Berkshire Hathaway. BYD was once a bigger part of the Berkshire portfolio.

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
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