Ford Motor Company (F) shares experienced a decline of 2.7% on Wednesday, closing at $15.71, as the automaker reported a steep 13.6% drop in May U.S. sales and announced fresh recalls. However, the stock traded higher in premarket activity on Thursday, rising to $15.81, as investors shifted their attention to the company's burgeoning energy storage business.
Ford's May sales figures revealed widespread weakness across its vehicle lineup. Total sales fell to 190,828 units, with electric vehicle sales plunging 43.9% year-over-year. Hybrid sales dropped 15.7%, while SUV sales declined 20.9%. Even the traditionally strong truck segment saw an 8.4% decrease. The sales miss compounds ongoing quality concerns, as Reuters reported that Ford is recalling 419,967 vehicles in the U.S. due to potential seat belt malfunctions that could increase injury risk in crashes. The recall affects certain 2018-2022 Expedition and Lincoln Navigator models. Additionally, Ford warned owners of about 4,600 Bronco Sport and Maverick vehicles not to drive them due to front lower control arm ball-joint issues that could lead to loss of control.
Despite these headwinds, the primary driver of investor interest remains Ford Energy, the company's battery storage division. Last month, Reuters reported that Ford Energy secured a five-year supply agreement with EDF for up to 20 gigawatt-hours (GWh) of battery energy storage systems (BESS). These large-scale battery packs are designed to store electricity for later use, with data centers emerging as key customers as AI demand strains the U.S. power grid.
Analysts have taken note of Ford's strategic pivot. Morgan Stanley's Andrew Percoco described Ford's partnership with CATL as an "underappreciated strategic competitive advantage" in energy storage, according to Investing.com. The Morgan Stanley team estimates that Ford Energy could generate $500 million to $600 million in run-rate EBIT from 20 GWh of capacity. Bloomberg Intelligence's Steve Man called the energy segment a "nice pivot to a higher margin business," while Miller Tabak's chief market strategist Matt Maley highlighted the hyperscaler theme, noting that companies tied to big cloud and data-center players are drawing investor interest.
Investors are increasingly comparing Ford Energy to Tesla's energy storage business, which has been a significant value driver for the EV maker. Benzinga noted that Ford Energy would directly compete with Tesla Energy in grid and home storage, though Ford has yet to match Tesla's scale or order book. The comparison underscores both the opportunity and the challenge for Ford as it seeks to establish itself in this high-growth market.
Policy developments could also impact Ford's trajectory. Reuters reported that the Alliance for Automotive Innovation, a trade group representing major automakers including General Motors, Toyota, and Ford, has asked the Environmental Protection Agency to delay enforcement of vehicle pollution rules by two years. Such a move would reduce compliance costs in the near term but adds another layer of regulatory uncertainty for the industry.
However, risks remain. Delays in Ford Energy orders, changes in tax-credit rules, or persistent recall and warranty expenses could weigh on the stock's recent premium. Investors have priced in a business that is still in its early stages and dependent on deliveries years away. Slower EV sales and weakening truck demand add to the pressure. Ford currently resembles a split stock: part traditional automaker grappling with sales and quality issues, part battery play riding the wave of rising power demand from AI data centers. Thursday's session will test which side investors choose to back.
