Key Takeaways
- Ford shares jumped more than 13% Wednesday, leading all S&P 500 stocks
- Morgan Stanley analysts identified Ford Energy as a crucial “underappreciated driver” for the company’s EV profitability strategy
- The company plans to roll out a minimum of 20 gigawatt hours of battery storage each year, starting deliveries in late 2027
- Analysts project Ford Energy could produce up to $600 million in operating profit annually by 2030
- The automaker’s CATL collaboration provides a competitive advantage for securing US energy storage tax credit compliance
Ford Motor (F) shares rocketed over 13% Wednesday, reaching approximately $13.56 and claiming the top spot among S&P 500 performers. The rally followed heightened investor interest in the automaker’s freshly unveiled energy storage venture and bullish commentary from Morgan Stanley analysts.
While other automotive manufacturers saw modest gains, Ford’s performance stood out dramatically. General Motors climbed 0.4%, Stellantis advanced 2.7%, and Tesla increased 3.9%.
The primary driver appears to be Tuesday evening analyst commentary from Morgan Stanley’s Andrew Percoco, who characterized Ford Energy as an “underappreciated driver of Model e path to profitability.” The company’s EV division, Model e, recorded $4.8 billion in losses during 2025.
Ford unveiled Ford Energy just days ago. This new division will manufacture US-assembled battery energy storage solutions for utility companies, data center operators, and major commercial and industrial clients.
The business model is relatively simple. Lithium-ion batteries identical to those powering electric vehicles can capture energy from renewable sources like solar and wind, providing reliable power storage for large-scale customers.
The automaker intends to supply at least 20 gigawatt hours of battery storage capacity per year. Initial shipments are scheduled for late 2027. To put this in perspective, Tesla has installed approximately 45 gigawatt hours of storage capacity in the last twelve months.
Wall Street Analysts Project Strong Earnings Contribution
Percoco’s analysis suggests Ford Energy has the potential to produce between $500 million and $600 million in steady-state operating profit at 20 gigawatt hours of capacity. He anticipates the division will achieve profitability by 2028 and reach nearly $600 million in operating profit by 2030.
This represents a substantial contribution. Ford is projected to generate approximately $9.5 billion in total operating profit during 2026, based on FactSet consensus estimates.
Morgan Stanley kept its Hold rating on Ford shares with a $14 price target.
Percoco also hinted at potential customer agreements on the horizon. “We believe that there is a fairly high likelihood that Ford signs an energy storage system supply agreement with large commercial customers, and potentially hyperscalers, over the next few months,” his research note stated.
CATL Collaboration Provides Strategic Advantage
Ford intends to obtain batteries for its energy storage operations from its Michigan manufacturing facility, which utilizes licensed technology from CATL — the global leader in lithium-ion battery production.
Morgan Stanley highlighted this as a significant competitive differentiator. Ford’s access to CATL’s lithium iron phosphate battery technology enables it to satisfy Foreign Entity of Concern compliance requirements — essential criteria customers must meet to qualify for the 30% Investment Tax Credit associated with energy storage installations.
“We believe Ford’s relationship with CATL is an underappreciated strategic competitive advantage for its Energy Storage business,” Percoco noted.
Ford originally revealed a $2 billion commitment to energy storage in late 2024. The announcement faced initial skepticism, particularly since it coincided with a $20 billion impairment charge in its electric vehicle operations.
Wednesday’s market reaction indicates investors are reassessing the opportunity. Ford shares showed little movement when Ford Energy was initially announced this week — it required the Morgan Stanley analysis to spark significant market interest.
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