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HomeMarketFord Is Selling EVs to DHL. The Vehicles Aren't the Big Part...

Ford Is Selling EVs to DHL. The Vehicles Aren’t the Big Part of the Deal.

DHL signs an agreement to purchase 2,000 electric-delivery vans by the end of 2023 from Ford.

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Courtesy DHL

Ford Motor
is selling electric delivery vans to
Deutsche Post
logistics company DHL. Selling vehicles is what car companies do, but this time Ford is selling more than wheels.

DHL announced Monday it has signed a memorandum of understanding with Ford (ticker: F) to purchase 2,000 electric-delivery vans by the end of 2023.

A couple thousand units isn’t all that big a deal for an auto maker that can easily deliver more than 4 million vehicles annually. But DHL also will purchase services from Ford’s Pro division, including connected telematics that provide usage and maintenance details as well as EV-charging services.

It’s extra revenue for Ford that goes beyond vehicle sales.

“Businesses going electric know that to be successful they must implement a strong charging and software optimization plan,” said Ford Pro CEO Ted Cannis to Barron’s in an emailed statement. “We are seeing more and more interest from customers in our one-stop-stop because we can provide industry-leading vehicles plus end-to-end charging and remote software solutions that work with Ford and non-Ford vehicles.”

Many auto makers have a desire to generate sales from services.
Tesla
(TSLA) charges customers a subscription fee of $15,000 for the highest level of driver-assistance features it calls Full Self Driving.
General Motors
(GM) has set an ambitious goal to double sales, off a base of about $140 billion, by 2030. Included in that goal is new business related to software and services, similar to what DHL will purchase from Ford.

Ford and GM shares don’t trade like there is a lot of profitable growth in connected-service sales. Both stocks trade for less than 8 times estimated 2023 earnings. Time will tell if investors were right to be cautious or if the EV transition also will bring the opportunity for new business from ancillary services.

Investors will get a deeper look at the Ford Pro division in 2023 when it begins reporting financial results by new business segments: EVs, traditional cars, Pro, and
Ford Motor
Credit. That should give investors some insight into growth and profit margins at Ford’s commercial vehicle operation.

Ford stock is down about 1.9% in early Monday trading. The
S&P 500
and
Dow Jones Industrial Average
are off 0.8% and 0.7%, respectively.

Coming into Monday trading, Ford stock was off about 33% so far in 2022. A combination of inflation and rising interest rates have hit car-related stocks harder than most.

Write to Al Root at allen.root@dowjones.com

Credit: marketwatch.com

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