Is Ford Rewiring Its Future With Investment in Battery Energy Storage?

Core Insights - Ford Motor Company is implementing initiatives to enhance its Ford+ strategy by reallocating capital towards higher-return areas that align with customer demand and support long-term profitable growth [1] Group 1: Ford's New Initiatives - Ford is creating a new battery energy storage business targeting markets such as data centers and electric-grid infrastructure [1] - The company plans to convert its battery manufacturing facility in Glendale, KY, to produce advanced energy storage systems, expecting to invest about $2 billion over the next two years [2] - The revamped facility will produce energy storage systems exceeding 5 MWh, including LFP prismatic cells and system modules for utility-scale applications [2] Group 2: Production Capacity and Partnerships - Ford aims to bring initial capacity online within 18 months and reach at least 20 GWh of annual deployment by late 2027 [3] - A restructuring agreement has been made with SK On and BlueOval SK, allowing Ford to independently own and operate the Kentucky plants while SK On manages the Tennessee facility [3] Group 3: Competitive Landscape - Tesla's Energy Generation and Storage business has seen significant growth, with a CAGR of 180% in energy storage deployments over the past three years [5] - General Motors' energy ecosystem, GM Energy, has achieved a 30% month-over-month revenue growth and a fivefold increase in sales of charging and energy products since January [6] Group 4: Financial Performance and Valuation - Ford's stock has underperformed compared to the Zacks Automotive-Domestic industry, gaining 27.6% over the past six months, while the industry grew by 52% [7] - The company appears undervalued with a forward price/sales ratio of 0.32, significantly lower than the industry's 3.63 [10]