Ford Motor Co. (F) shares surged approximately 8.5% to $13.01 on Wednesday, following a Morgan Stanley analysis that identified the automaker's newly launched energy storage division as a significant future earnings catalyst. The move marks a notable shift in investor focus toward Ford's non-automotive ventures.
Morgan Stanley analyst Andrew S. Percoco highlighted Ford Energy, a unit established on May 11, which plans to manufacture battery energy storage systems (BESS) for U.S. data centers, utilities, and industrial clients. The company will produce these systems at its Glendale, Kentucky plant, with initial deliveries expected in late 2027. Percoco described Ford's partnership with China's CATL as an "underappreciated strategic competitive advantage," estimating that Ford Energy could generate $500 million to $600 million in annual earnings before interest and taxes (EBIT) at a production capacity of 20 gigawatt-hours.
Ford Energy is part of the automaker's broader strategy to repurpose battery capacity originally intended for electric vehicles, which have experienced slower-than-expected demand. The unit's first product, the Energy DC block, is a 20-foot containerized storage system utilizing lithium iron phosphate cells, known for their durability and thermal safety in stationary storage applications. Lisa Drake, president of Ford Energy, noted that "dispatchable, bankable energy storage is accelerating" in the United States.
The announcement comes on the heels of a robust first quarter for Ford. The company reported $43.3 billion in revenue and $2.5 billion in net income, with adjusted EBIT reaching $3.5 billion, aided by a $1.3 billion one-time tariff benefit. Ford raised its quarterly dividend to 15 cents and now expects 2026 adjusted EBIT between $8.5 billion and $10.5 billion. Ford Blue contributed $1.9 billion in EBIT, while Ford Pro added $1.7 billion and saw a 30% increase in paid software subscriptions to 879,000. However, the Model e electric vehicle unit posted a $777 million loss.
In a move to strengthen investor communication, Ford appointed Maria Ricciardone as chief investor relations officer on May 1, succeeding Lynn Antipas Tyson. Ricciardone, formerly vice president, treasurer, and investor relations at Lockheed Martin, is expected to help translate Ford's operational progress into a clear narrative for investors, according to CFO Sherry House.
The rally has sparked valuation discussions. According to Zacks Investment Research, Ford trades at roughly 0.28 times forward sales, a multiple considered cheap. However, auto stocks often carry low valuations due to concerns about cyclical risks, margin pressures, tariffs, and the significant capital expenditures required before new ventures generate returns.
Ford's energy storage initiative is not without challenges. Timing and political scrutiny are key factors. In January, a U.S. lawmaker questioned Ford's strategy to produce lithium iron phosphate cells and grid storage systems using CATL technology. Ford has maintained that the batteries will qualify for tax credits. With deliveries not expected until late 2027 and pricing still undisclosed, competitors like Tesla's Megapack have time to solidify their market positions.
Despite the enthusiasm, the real test lies ahead: securing signed customer contracts for energy storage systems. For now, investors are betting on Ford's ability to monetize its battery plant investments beyond traditional vehicle sales, marking a potential turning point in the company's turnaround story.
