Ford Pro Commercial Trucks to Make Up for Model e Losses
- Ford in the first quarter lost $722 million, compared with a first-quarter 2022 loss of $3.1 billion, which was tied mostly to Ford’s investment in Rivian.
- Ford Pro’s Q1 profit on work trucks was nearly three times the 2022 level, and gross revenue was up 28%, to $13.2 billion.
- CEO Jim Farley said Model e’s maturation to second-generation EV technology will help the unit reach break-even by year’s end, even as it expects to lose $3 billion for the year.
Ford Motor Co. in the first fiscal quarter lost $722 million of the $3 billion it warned last March it would lose on its Model e “startup” this year, while a thriving Ford Blue and a quickly growing Ford Pro unit more than offset that loss to earn $1.8 billion overall. That compares with a first-quarter 2022 loss of $3.1 billion, which was tied mostly to Ford’s investment in Rivian.
This is the first year Ford’s operations are split into its Blue business (Mustangs, F-150s, and other internal-combustion models), Pro (work trucks and vans), and Model e, which includes F-150 Lightning and Mustang Mach-e, but not E-Transit trucks.
“Ford Pro is developing into a resilient business,” CEO Jim Farley said in the company’s Q1 earnings call with Wall Street analysts. “It’s certainly less cyclical than the auto business.”
That led us to wonder whether the Ford e-Transit—which is accounted for in Pro and not Model e—also lost, or perhaps made money in the first quarter. Farley and Chief Financial Officer John Lawler in the call touted Pro’s growth and a 30% “attach rate” for aftermarket services on the commercial trucks.
Ford Pro’s Q1 profit was nearly three times the 2022 level, and gross revenue was up 28%, to $13.2 billion. Lawler said Ford Pro’s net income for the full year will “about double” over ’22 to $6 billion, just $1 billion short of what it expects from Blue’s gas-powered Mustangs, Broncos, Mavericks, and the like.
So did E-Transit add to Pro’s profitability or would it have added to Model e’s loss? Journalists were allowed to listen in to the call but could not ask questions, and no Wall Street analyst asked. One hint: Farley noted that while Lightning’s suggested list prices are up $11,000, E-Transit prices are up “a lot,” without being specific.
Farley and Lawler said Model e’s maturation to second-generation EV technology will help the unit reach break-even by year’s end, even as it expects to lose $3 billion for the year.
The first lesson learned from launching three EV models beginning three years ago was “be careful where you compete,” Farley said. “We are not going to price just to gain market share. The first generation of products were very challenging, because we didn’t know what we didn’t know.”
Thus, Ford will build its EV portfolio on profitability, not volume, which is somewhat antithetical to the burgeoning electric-power movement’s urgency in helping to reduce CO2 emissions. These comments appear aimed at both Tesla, which has been cutting vehicle prices as more EV competitors enter the market, and General Motors, which already has surpassed Ford for second place in US EV sales in the first quarter.
Farley says that despite one Wall Street analyst’s observation that some F-150 Lightnings are sitting on dealers’ lots, Ford is selling them out in all markets, including Norway, where it just went on sale. Transaction prices are now at or slightly above MSRP, instead of selling for big dealer markups, he said. “We wouldn’t be worried about demand and be doubling production” to about 150,000 units, which could be enough to retake second place in EV sales from GM.
Under the Ford Blue business unit, the all-new Ranger pickup launches next week, followed by the Raptor version, and there will be news on F-150 and Expedition later this year (a refresh of the pickup, and hybrid, and Raptor versions of the SUV). Like GM in its Q1 earnings call, Ford projects the US market will buy 15 million vehicles this year.
Farley also addressed ongoing quality problems for its new vehicle launches. Ford slowed the launch of its new Super Duty F-Series pickups and hired 300 new inspectors and has assigned a team of workers to test-drive the trucks.
Even if some regions of the US have not yet warmed up to the Ford F-150 Lightning, do you agree with doubling production? Please comment below.