Ford Motor has been experiencing ups and downs amid the tenure of CEO Jim Farley, who’s been trying to right previous wrongs such as quality problems while also attempting to execute a visionary strategy on electric vehicles even though consumers aren’t cooperating.
But one big thing Farley did right is give Ted Cannis the keys to Ford’s commercial-vehicle operations three years ago, instruct him to create a new-era profit driver from old and new elements, and then step back and let Cannis go to work. And now, arguably, Ford Pro is the best-working part of the automaker.
Farley “brought to light in this company a look at a gem that we didn’t really know we had,” Cannis says. “I give him full credit.” By creating an entity in Ford Pro, Farley also “gave us a way to financially segment the P&L capabilities of the commercial operation. He wanted to create accountability to focus our enterprise around the commercial B2B customers and to provide them the products and services they need.”
Ford Pro has become a nearly $60 billion business within Ford. Its sales rose by $18 billion in the first quarter, a year-to-year increase of 36%, while the unit’s operating income rose by 81% in 2023 ,with a 12.4% operating margin. That bested even the 7.4% margin for Blue, the Ford division that houses its traditional high-profit, hydrocarbon-powered trucks and SUVs.
“We knew there was this opportunity to create a bundled suite of services, a one-stop-shop for B2B customers, who only had fragmented solutions, around new services like software and charging,” Cannis tells me. “We had just started connecting vehicles in 2019 with connected modems, and we were getting better data, and getting better at extracting that data for the benefit of the customer at their request. It created continuous relationships with customers that we didn’t have when the cars weren’t connected.”
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Ford Pro serves commercial customers with a one-stop shop of work-ready vehicles, service, software, charging, and financing solutions that can make running a fleet simpler and more productive. Made up of Ford’s traditional fleet and commercial businesses as well as emerging telematics, logistics and other connective systems for business customers, Ford Pro takes an agnostic approach to the means of propulsion — gasoline, diesel, electric — for its B2B customers, while for consumers Ford now has Blue as well as a Model e division managing its high-stakes electric future.
Before creation of Ford Pro, Ford already held an outsized share of most commercial-vehicle markets with its Transit vans, F-Series trucks, Interceptor police SUVs and other lines, and now it has a 40% U.S. market share of Class 1 through 7 full-sized trucks and vans. And now, Ford Pro’s telematics allows owners, for instance, to get an overall picture of their fleets, from maintenance reports to vehicle locations to fuel efficiency to repair needs to the behavior of drivers.
“We work with fleet managers whose jobs are on the line,” says Cannis, a 35-year company veteran who headed Ford’s earlier Team Edison operation for developing the electric-vehicle business.
“We’re doing both [electric and internal combustion engine, or ICE] solutions or it would be confusing for everyone,” Cannis says. “We are making one umbrella, one interface, one suite of services around the software-defined vehicle and Ford Plus connectivity. Makes it easy for the customer.”
Ford Pro has more than 500,000 software paid subscriptions, up 46% year over year, and those margins are more than 50%, the company says. Ford expects this area will drive 20% of Ford Pro operating income in two years.
While American consumers and businesspeople are still largely making up their minds about the future of their electric-vehicle purchases, two early features of this period of foment in automotive propulsion have favored Ford Pro.
Commercial fleets have been the fastest segment of the transportation economy to embrace electric power, for reasons including the fact that many of them can be charged overnight in a single location, and Ford Pro has been leading the way among rivals with EV models. After it launched the E-Transit in 2022, the cargo and utility van captured a 50% share of segment sales right away, Cannis says.
“In the U.S., we’ve got the Post Office business, 9,250 units this year,” he says. “We have sold 300 E-Transits [and more than 200 Mach-E SUVs] to New York City” for law-enforcement and emergency response to replace gas-powered vehicles. “We have a wide base of customers. And later this year, later than we wanted, we will introduce a longer-range version of E-Transit.”
Ecolab is proceeding from a 100-vehicle pilot to phase one of a national, 10,000-vehicle fleet electrification which involves 1,000 Ford Pro vehicles and 400 EV chargers. Elite Health Care went from one E-Transit in 2022 to 27 today based on its experience saving almost $6,500 a year per van on operating costs, Ford says. And so on.
But electricification remains a huge learning curve for B2B automotive customers as well as consumers. “This transition is difficult,” Cannis says. “We’ll have ICE vehicles in fleets for a long time; [commercial owners] only flip about 10% to 15% of their fleets each year.
“One early customer said they will buy 2,000 [E-Transits], but in 2022, they bought only one. They had to do huge data transfers and conduct trials. Last year, they bought maybe 10, and this year it’ll be more like 100. They need to have time for the [EV-charging] infrastructure to get into the ground.”
Ford Pro also responds to customer input about what services to add or even discontinue. A new feature that freezes operation of vehicles between certain hours, thwarting theft, perfectly fit a need case brought to Ford Pro by a construction company in Colorado. “We launched it in January,” Cannis says.
Competitors have begun responding to the B2B opportunities they may have left to Ford Pro so far. GM announced GM Envolve, a “one-stop customer experience” across its brands, in 2023, and Stellantis launched a commercial strategy called Stellantis Pro One. But rivals, Cannis says, haven’t done as good a job as Ford Pro of integrating their service offerings.
