Ford, considered one of the three largest U.S. automakers alongside General Motors (GM) and Stellantis, has suddenly drawn attention in the stock market as an artificial intelligence (AI) power play. After President Donald Trump shifted policy direction toward fostering internal combustion engine vehicles by abolishing electric vehicle (EV) support measures upon returning to office last year, the company repurposed its existing battery production facilities for energy storage systems (ESS). Amid widespread expectations that Ford will benefit from surging power demand from AI data centers, its shares have soared more than 30% this month alone. However, some point out that the performance of this side business needs further monitoring, given that Ford posted an annual loss last year centered on its core internal combustion engine vehicle business and that demand is also slowing this year due to the war in the Middle East.
Ford Surges More Than 30% This Month on ESS Subsidiary Ford Energy Launch... "Possible Contracts With Hyperscalers"
The Wall Street Journal (WSJ) reported on the 27th (local time) that Ford's energy business division has emerged as a star business riding the AI data center construction boom. In connection with this, Ford decided in December last year to establish its own ESS business division under the name Ford Energy, and on January 27 of this year appointed President Lisa Drake as head of the organization. Then, on the 12th of this month, Ford established Ford Energy as an ESS-specialized subsidiary, formalizing its strategy to target the expanding AI data center and renewable energy power grid markets. Ford CEO Jim Farley said at a fourth-quarter earnings call on February 10 this year, "The energy storage business is a key element in achieving an 8% adjusted earnings before interest and taxes (EBIT) margin (ratio to revenue) by 2029." Ford's EBIT margin last year was 3.6%.
Indeed, Ford's stock price rose 31.5% from the start of this month through the 27th, buoyed by its entry into the ESS sector. Ford rose 3.66% on the 27th as well, marking its sixth consecutive trading day of gains since the 19th. The stock, which stood at $11.50 at its previous low on the 4th of this month, soared 38.1% to $15.88 on the 27th. Considering that auto sales have been slowing recently due to high oil prices stemming from the Middle East war, this is a remarkable achievement.
Ford plans to invest $1.5 billion (approximately 2.5 trillion won) in its energy storage business this year alone. It will also convert its battery plant in Kentucky into a facility producing large cells (storage units) for data centers and power grids. Part of the Michigan battery plant scheduled to open this year will also be used as a small storage cell production facility. Following the launch of Ford Energy, Ford announced that it had signed a contract to supply Électricité de France (EDF) North America's business unit with energy storage facilities of 4 GWh (gigawatt-hours) annually starting in 2028.
What decisively ignited expectations for Ford's energy storage business was a Morgan Stanley report. Morgan Stanley analyst Andrew Percoco said on the 13th that for Ford, "there is a fairly high possibility of signing ESS supply contracts with major customers, especially hyperscalers (mega-scale cloud operators), within the next few months." Percoco further estimated Ford Energy's value at $10 billion (approximately 15 trillion won) and praised the technology partnership with Chinese battery maker CATL as an "undervalued strategic competitive advantage." It was a report that abruptly transformed Ford from a mere automaker into an AI infrastructure company. Boosted by the report's analysis, Ford's stock price jumped 13.18% that day. This was the largest single-day gain in six years, since March 2020.
Idle Battery Facilities Repurposed Amid EV Chasm and Trump's Withdrawal of EV Support... Unexpectedly Breaking Out of "Auto-Only" Path
Given Ford's symbolic significance in the auto industry, the company's transformation into an energy company may come as an unfamiliar piece of news to investors. Ford is a leading U.S. automaker founded by former CEO Henry Ford in Michigan in 1903. The company notably transformed automobiles from a luxury reserved for the wealthy into a mass necessity by launching the "Model T" in 1908. In 1913, it became the first in the world to introduce the moving conveyor belt assembly line on the production floor, establishing what is known as the "Fordism" mass production system. Through this mass production system, Ford left a revolutionary mark on industrial history. In 1948, it unveiled the legendary "F-Series" pickup truck, and in 1956 it listed shares on the New York Stock Exchange (NYSE).
Ford, which had walked a single-track auto path, ventured into the ESS business because its existing EV business experienced a demand stagnation (chasm) phenomenon and federal government policy support was also cut off starting last year. Ford Energy is the product of Ford repurposing factories that had received massive investments for EV battery production, after they became idle.
Earlier, in May last year, President Trump worked through Congress to nullify a bill in California that would have banned new internal combustion engine vehicle sales starting in 2035. Subsequently, from September 30 of the same year, the federal tax credit of up to $7,500 provided when purchasing new EVs was also abolished. According to market research firm Rho Motion, North American EV sales in October last year, immediately after the subsidy disappeared, plunged 41% from October 2024 to 100,370 units. This contrasted with the global market trend during the same period, in which EV sales (including plug-in hybrids) rose 23%.
On December 3 last year, President Trump also gathered executives from the three major U.S. automakers — Ford, GM, and Stellantis — at the Oval Office in the White House in Washington, D.C. There, Trump signed an executive order easing the Corporate Average Fuel Economy (CAFE) standards, which set the minimum fuel efficiency manufacturers must comply with. The executive order centers on lowering the average fuel economy target for 2031 model year new vehicles from 50 miles per gallon (about 3.78 liters) to 34.5 miles. The order overturned existing regulations introduced by former President Joe Biden to encourage automakers to improve fuel efficiency in internal combustion vehicles and expand production of hybrids and EVs. The lower the CAFE standard, the more advantageous it becomes for automakers to produce internal combustion engine vehicles rather than EVs.
Trump's EV-suppression policies have not necessarily benefited U.S. automakers either. GM, the largest U.S. automaker, disclosed on November 14 last year that adjustments to its EV production capacity would result in a total of $1.6 billion (approximately 2.4 trillion won) in costs being reflected in its third-quarter results. GM also warned that additional costs could arise as it continued to adjust the pace of its EV transition.
Ford's plan to enter the ESS business also began in earnest immediately after Trump signed the executive order in December last year. At the time, Ford's CEO praised Trump at the event, calling it "a victory for common sense and economic viability."
Core Business Posted Net Loss Last Year, Sales Overtaken by China's BYD... "Must Sign at Least Five Major Energy Contracts in One Year"
Although Ford is regaining attention through its ESS business linked to AI infrastructure, the growth of its core business has yet to fully recover. The massive battery facility investments Ford poured into EVs are also not easily offset simply by business conversion. In fact, on February 10, Ford announced that its fourth-quarter net loss reached a record $11.1 billion (approximately 16.6 trillion won) due to factors including accounting asset impairments related to its EV business. Ford's net loss for last year as a whole also reached $8.2 billion (approximately 12.3 trillion won).
Ford bore approximately $2 billion (approximately 3 trillion won) in additional costs last year due to the impact of Trump's tariff policies and expects to shoulder a similar level of expenses this year. In particular, the company explained that last year, after a fire broke out at the New York state plant of aluminum supplier Novelis, it had to substitute imported aluminum, taking on a heavy tariff burden. The Trump administration's sudden change in the timing of tariff relief policy application also generated $900 million (approximately 1.35 trillion won) in additional costs. Ford also projected that its EV business division will run losses through 2029.
Ford has also been overtaken in vehicle sales by China's BYD for the first time ever in the global market. Ford's sales last year totaled 4.395 million units, down 75,000 from 4.47 million in 2024, while BYD During this period, sales rose by 330,000 units from 4.27 million to 4.6 million. As a result, BYD and Ford swapped places in last year's global auto sales rankings, finishing sixth and seventh, respectively.
Profitability in the auto business is expected to improve considerably this year, but not to the extent that justifies a 30%-plus jump in the stock price in less than a month. Ford has guided full-year EBIT to between $8 billion and $10 billion (roughly 12 trillion to 15 trillion won), well above last year's $6.8 billion. In the first quarter, adjusted earnings per share came in at $0.66, far exceeding the analyst consensus of $0.19. Revenue rose 6% year-on-year to $43.3 billion. Ford also expects to recover roughly $1.3 billion (about 1.9 trillion won) in tariffs following the U.S. Supreme Court's Feb. 20 ruling this year that struck down reciprocal tariffs.
Ford's near-term share price is likely to hinge more on results from its new ESS business than on its auto operations. The stock is responding more sensitively to expectations around the new venture than to the legacy business, which the market has largely priced in. On the 13th of this month, BNP Paribas analyst James Picariello noted that the move "represents a genuine repurposing of excess battery cell capacity," but added that "Ford will need to sign five contracts a year on the scale of its deal with EDF for the business outlook to gain credibility."
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