Ford CEO Jim Farley discussed a range of topics Thursday from hybrids and electric vehicles to how the automaker deals with international competitors. Comments from the Wolfe Research investor conference left us feeling better about Ford's future. Wall Street appeared to agree, sending the club's stock up more than 2% in afternoon trading. Farley struck an optimistic tone about the future of the automaker's professional business, which consists of a commercial fleet of vehicles that includes software and services for businesses. He also said that focusing on hybrid cars will be a key strategy to offset the losses of electric cars. He explained that hybrid cars can attract customers who are hesitant about electric cars but want to improve fuel efficiency. Ford Pro “If you're looking for the future of the auto industry, stop looking at FDS [full self-driving] “And Tesla, look at the Ford Pro,” Farley said. “We haven't reached the top in Pro yet.” The CEO pointed to the company's half-million subscribers bringing in 50% gross margin, multi-year order banks, and “the fact that it's at maximum capacity across all of its Pro vehicle lines due to 'huge pent-up demand' in the U.S. and Europe. Farley said the shift to Pro was “Despite the success of the Pro, Ford is still losing money in its Model e business, which hosts its fleet of electric vehicles. Adoption of electric vehicles has slowed as customers hesitate to build them. “Moving from gas to electric. But Ford is in a unique position because of the growing demand for its hybrids and the high profit margin. We have pushed the automaker to focus more on hybrids. Electric cars and hybrids “Customers don’t have to change their cars,” Farley said. “They rely on their habits.” Hybrid cars and they can instantly do the math on fuel economy efficiency.” He added that “the calculations related to electric vehicles are more complex” because customers wonder how much energy cost savings they have compared to gasoline. The economics of owning an electric car can be mysterious to someone who has never driven an electric car. Farley said that success in electric cars is the ability to compete with Chinese automakers whose cars have saturated the market in China and Europe. Chinese rivals include Nio, Li Auto and BYD, which still holds a small position in Warren Buffett's Berkshire Hathaway. BYD was once a larger part of Berkshire's portfolio. F 1Y Mountain Ford 1 year “If you work for our company, even if you have a professional, if you can't compete fairly and directly with the Chinese around the world. 20% or 30% of your revenue is at risk,” Farley said. “Pro adoption of electric vehicles is going much better than we thought,” he added, given the high demand for vehicles like the E-Transit vans or the Pro versions of the F-150 Lightning pickup trucks. “The operating cost benefits on the energy side are much better. That's what's really exciting for us.” While Farley was reluctant to provide updated guidance on EV losses, he noted that gross margins will improve over the year and will be closer to breakeven. (Jim Cramer's Charitable Trust is long F. See here for a full list of stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you'll receive a trade alert before Jim takes a trade. Jim waits 45 minutes after a trade alert is sent before buying or selling a stock in his charitable fund's portfolio. If Jim talks about a stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade. The above Investment Club information is subject to our Terms and Conditions and Privacy Policy, as well as our Disclaimer. No obligation or fiduciary duty exists or is created by your receipt of any information provided in connection with the Investment Club. No specific results or profits are guaranteed.
