There was a book published in 2008 titled, Ford Model T: The Car That Put the World on Wheels. It’s an interesting read about how Henry Ford’s launch of the Model T in 1908 was the start of the U.S. automobile industry, and America’s decades-long love affair with the “freedom of the road.”

Despite its humble appearance, the Model T became the most influential car of the 20th century. Priced so that the average American could afford it, the Model T was sold from 1908 until 1927.

My favorite anecdote about the Model T is how it got its nickname - the “Tin Lizzie.”

In the early 1900s, car dealers would try to create publicity for their new automobiles by hosting car races. In 1922, a championship race was held in Pikes Peak, Colorado.

Entered as one of the contestants was Noel Bullock along with his Model T, named "Old Liz." Since Old Liz looked the worse for wear - it was unpainted and lacked a hood - many spectators, while laughing, compared Old Liz to a tin can.

By the start of the race, the car had the new nickname of "Tin Lizzie." But to everyone's surprise, Tin Lizzie won the race. Having beaten even the most expensive other cars available at the time, Tin Lizzie proved both the durability and speed of the Model T.

Fast forward to today, and Ford Motor (F) is trying to recreate that old “Tin Lizzie” magic and surprise everyone again by becoming competitive in the world of EVs with its “Model e.”

Ford and EVs

Ford’s plans to go electric were pared back after electric vehicle (EV) sales growth slowed in the second half of 2023.

Bear in mind, though, that Ford has a broad strategy that also includes gasoline- and diesel-powered trucks and 4x4s, as well as hybrid vehicles.

At the moment, EVs represent just a small portion of Ford’s overall sales. However, the company does sell the country’s second most popular SUV-type EV in the form of the Mustang Mach-E. Last year, EV sales revenues reached $5.9 billion, compared to $102 billion generated by the “Blue” division.

The “Blue” division includes hybrids, along with gasoline and diesel vehicles. Another $58 million in sales came from Ford Pro, which provides commercial vehicles and fleet management software, vehicle maintenance, and financing services.

It is interesting to note that Ford is dominating a niche area within the EV space, the fleet-based vehicle operators. Small business owners say EVs are ideal for their everyday, relatively short-distance routes.

This trend is good news for Ford, which sells more work trucks and vans in the U.S. than any other automaker. The company’s aforementioned commercial division, Ford Pro, has become its biggest and most profitable growth engine.

“EV adoption on Pro is actually going much better than we thought,” CEO Jim Farley told analysts in February. “They use the vehicles more intensely, so the operating costs on the energy side are much better than they thought. We can’t make enough E-Transits.”

I believe we will see more and more companies adopting EVs for their commercial fleets, which will benefit Ford.

While the company doesn’t expect to make money on sales of commercial EVs until its next-generation vehicles debut in 2026, it is offsetting some of those losses by upselling buyers on connected-car logistics and servicing contracts.

Ford already has a half-million commercial customers signed up for business software subscriptions and telematics services to manage and maintain their fleets more efficiently. The forecast is for software and services to make up 20% of Ford Pro’s profits by 2026.

Growth in those areas, along with strong sales of traditional internal-combustion engine (ICE) vehicles, helped Ford Pro's earnings more than double in 2023. Ford says its commercial unit will be its most profitable division in 2024, earning between $8 billion and $9 billion.

F-Series Bonanza

Another key to Ford’s success remains its wildly popular F-series trucks. Once again last year, the F-series trucks were the top-selling vehicles by far in the U.S., easily outpacing the runner-up – the Chevrolet Silverado.

The F-series, which has topped the sales charts for almost 50 years, ranges from a $38,000 F-150 to big, well-appointed models at over $100,000.

These vehicles surged in price since COVID-19, as has Ford’s profit from them. The gross profit per unit has gone from just $2,000 in 2019 to $4,500 more recently. It had been as high as $6,000 in the post-pandemic spending rush.

Hybrids, though, will become an increasing part of Ford’s future growth. In early April, the company said: “Across gas and hybrid vehicles, an increasing preference for hybrid trucks and SUVs helped deliver Ford the best-ever quarterly hybrid sales record.”

The outlook for 2024 is very positive as well, with hybrid sales expected to rise by 40%.

Add it all up, and Ford stock is an interesting buy. Its stock is pricier than peers - General Motors (GM) and Stellantis (STLA) - from a price/earnings perspective. However, after a not-so-good last two years, Ford seems poised to step on the accelerator in the second half of this decade.

And even with EV prices expected to come down across the industry this year, Ford is guiding for a record operating profit of $10 billion to $12 billion. F stock is a buy below $13.50.