Ford Motor Company saw its stock close up 4.74% at $17.44 on Friday, driven by investor enthusiasm for its battery storage unit, Ford Energy. The unit inked its first major customer agreement with EDF power solutions North America, a five-year framework deal to supply up to 4 GWh per year—totaling 20 GWh—of Ford's DC Block battery energy storage systems (BESS), with deliveries beginning in 2028.
This deal positions Ford as more than just an automaker, with the market now viewing it as a contender in power infrastructure. The stock's recent momentum has been less about the F-150 and more about Ford Energy's potential in the growing battery storage market. At the latest level, Ford's market capitalization stands at approximately $71 billion.
AI and Data Center Demand
The deal is partly fueled by the booming demand for backup power from data centers, driven by the rise of artificial intelligence. Reuters reported that AI is prompting more data center operators to explore grid-support and backup solutions, providing an opening for automakers like Ford to leverage battery networks originally built for electric vehicles (EVs).
Financial Outlook and Challenges
Ford has raised its full-year adjusted EBIT outlook to between $8.5 billion and $10.5 billion, following a first-quarter performance that included revenue of $43.3 billion, net income of $2.5 billion, and adjusted EBIT of $3.5 billion. CFO Sherry House stated that "the path to higher margins is clear."
However, the company still faces significant headwinds. High factory conversion costs, soft EV demand, and ongoing battery supply risks from China persist. Ford expects its Model e EV unit to lose between $4.0 billion and $4.5 billion this year, with commodity headwinds around $2 billion and tariff costs near $1 billion, excluding a one-time tariff benefit.
Competitive Landscape
Tesla remains ahead in the grid battery space, with its storage unit projected to be more profitable than its EV arm in 2025. Legacy automakers like General Motors (GM) are also under pressure from slowing EV battery demand. A GM-LG battery plant in Ohio recently delayed bringing back hundreds of workers due to weak EV demand, according to Reuters.
Morgan Stanley analyst Andrew Percoco noted that Ford's partnership with CATL provides an "underappreciated strategic competitive advantage" for its storage efforts, potentially opening doors to deals with large commercial customers and hyperscalers.
Execution Challenges
Converting battery plants to produce lithium iron phosphate (LFP) cells—a cheaper chemistry common in storage—can take up to 18 months and cost several hundred million dollars. Furthermore, storage demand alone will not absorb all the excess EV battery capacity carmakers have built. Ford's ability to execute on its framework deal with EDF, securing real orders and margins, will be crucial.
The broader market also contributed to the positive sentiment, with the S&P 500 rising 0.2% for a ninth consecutive weekly gain, the Nasdaq adding 0.2%, and the Dow finishing 0.7% higher.
