Ford shares rise 28% in two weeks
Ford shares surged 28% in just the last two weeks. This happened after the company announced the creation of a new division, Ford Energy, which will focus on repurposing excess battery capacity. Spare production lines for electric vehicles are now being used to manufacture energy storage systems for utility companies and data centers.
New Ford Energy division
Ford’s retreat from several electric vehicle programs cost the company billions, but at the same time pushed it to create a new energy storage subsidiary. The market richly rewarded this move. The stock price of the Detroit automaker rose 28% in the two weeks following the founding of Ford Energy. The new division repurposes manufacturing capacity previously intended for EV battery packs, using it to create batteries for energy storage systems designed for utility companies, industrial clients, and AI data centers.
Connection with China’s CATL
Investors are particularly attracted to Ford’s connection with Chinese company CATL, the world’s largest battery manufacturer. Ford licenses CATL’s technology for cells it produces in Michigan and Kentucky. This deal benefits both sides: Ford gets proven battery technology, and CATL gets access to the US market, which would otherwise be difficult for it to enter.
Ford abandoned its attempt to beat China in batteries and instead made a deal.
First major contracts
According to The Wall Street Journal, Ford plans to deploy at least 20 GWh annually for its energy storage systems. In mid-May, the company announced a deal with renewable energy developer EDF to supply up to 4 GWh of battery storage annually for five years, totaling 20 GWh. According to James Picariello, head of US auto market research at BNP Paribas, Ford needs more such deals.
This is a genuine repurposing of excess battery cell capacity. Theoretically, we need five more such contracts over the next 12 months to confidently say Ford will reach 20 gigawatt-hours of demand.
Massive EV losses
At the end of last year, Ford announced a $19.5 billion write-down after cutting several EV plans, including battery joint ventures with SK On and LG Energy Solution.
This pivot demonstrates how a company that suffered significant losses due to overinvestment in EVs was able to turn a problem into an opportunity. Instead of simply cutting production, Ford found a new market for its battery technologies. The collaboration with CATL allows the company to remain competitive without having to develop new technologies from scratch on its own. The success of this strategy will now depend on Ford’s ability to secure enough new contracts to fully load its production capacity. If the company manages to achieve its planned 20 GWh of annual output, it could become a new stable source of revenue to offset losses from its EV division.