Ford's Electric Revolution: A New Era of Profitability and Growth

Ford Motor Company (F) is on a roll, and it's not just because of its iconic gas-powered and hybrid vehicles. The company's strategic shift towards electric vehicles (EVs) and commercial vehicles (Ford Pro) has driven a new era of profitability and growth. Let's dive into the numbers and the story behind Ford's recent success.

Ford's second-quarter 2024 results were nothing short of impressive. The company reported revenue of $47.8 billion, up 6% year-over-year, with net income of $1.8 billion and adjusted EBIT of $2.8 billion. Ford Pro, the company's commercial vehicle and services segment, was a significant driver of this growth. In the same quarter, Ford Pro's EBIT was $2.6 billion, up 7% year-over-year, with a margin of 15%. The segment's revenue was $17.0 billion, up 9% from the previous year. This growth is driven by strong demand for Super Duty trucks and Transit commercial vans, as well as increasing adoption of Ford Pro's software and mobile repair services.



Ford Blue, the company's iconic gas and hybrid vehicle segment, has also seen significant growth. In the second quarter of 2024, Ford Blue's hybrid sales were up 34%, representing nearly 9% of Ford's global vehicle mix. This growth is a result of customers' increasing preference for hybrid vehicles and Ford's commitment to offering a wide range of hybrid options.

Ford Model e, the company's electric vehicle and digital capabilities segment, has achieved significant cost reductions of around $400 million in the second quarter of 2024. These cost reductions are a result of the company's disciplined capital allocation and focus on improving the efficiency of its electric vehicle production processes.

Customers exercising "freedom of choice" made Ford the No. 1 gas, No. 2 electric, and No. 3 hybrid vehicle brand in the U.S. in the second quarter of 2024. Ford Pro's commercial customers are buying every Super Duty truck and Transit van the company can make, outstripping production capacity. This has led to the decision to add a third North American assembly plant for Super Duty trucks, starting in 2026.

Ford's quality has been improving, with the company jumping 14 spots to No. 9 in J.D. Power's 2024 U.S. Initial Quality Study. The Bronco Sport was named the best small SUV for initial quality, and Ford's Lincoln luxury brand was recognized for enhanced performance. Ford's efforts to lift the quality of new products are starting to pay off, with positive implications for customer satisfaction and the company's operating performance.

Ford's strategic shift towards EVs and commercial vehicles has allowed the company to maintain a strong balance sheet, with nearly $27 billion in cash and about $45 billion in liquidity at the end of the second quarter of 2024. The company remains confident in its full-year 2024 results, including increasing effectiveness in generating cash.

In conclusion, Ford's electric revolution is driving a new era of profitability and growth for the company. With strong product lineups, a successful commercial vehicle segment, and improving quality, Ford is well-positioned to continue its success in the long term. As an investor, it's clear that Ford is a company to watch and consider for your portfolio.