Ford Chief Executive Jim Farley and his top executives will spend nearly all of Monday talking with analysts and investors about their plans for “re-founding” Ford around the three pillars of its commercial vehicle business, a strategically curated collection of EVs and a legacy combustion vehicle business run for maximum cash.
Executives talked through more than 120 slides explaining how Ford planned to develop unique EVs – including a three-row electric SUV that would be a “bullet train” for families.
The company announced multiple new battery mineral supply agreements, and explained how its commercial vehicle unit, Ford Pro, will account for roughly 60% of Ford’s projected $9 billion to $11 billion in pre-tax profit this year. (Ford’s EV’s will lose $3 billion this year.)
If investors had not received the message before, they had it today: Ford Pro and a collection of electric vehicles aimed mainly at uncrowded niches will get most of the capital investment going forward.
Ford’s role model for the future is not Tesla, or certainly General Motors. It is John Deere – the company that over the past decade has re-made itself as a technology services company that delivers its software and data products bundled in huge, green tractors and harvesters instead of smartphones.
Deere’s market cap is $108 billion – roughly twice Ford’s market valuation – an unflattering comparison that Farley volunteered.
“Auto companies have been stuck in a valuation box,” Farley told analysts.
The key to escaping that box will be Ford’s success at eliminating a $7 billion cost gap to its competitors. That means transforming its engineering operations, radically simplifying product offerings, taking money out of its distribution (if dealers allow it,) cutting labor costs as much as 30% per vehicle and cleaning up supply chain and quality snafus that tanked 2022 profits.
Those are tall orders. So far, Wall Street is skeptical. Ford shares were down 1.3% at mid-day after a full morning of talk from the top.
CFO John Lawler addressed the elephant in the room. “You’re not going to start believing us until we deliver,” he told analysts. “We’ve told you this before and we haven’t delivered.”
