Morgan Stanley turns bullish on Ford's EV storage business
Ford Motor stock surged 13% in a single session the week of May 10 after Morgan Stanley issued a bullish call on the automaker's energy storage business. That was Ford's biggest one-day gain since March 2020.
For context, that kind of move doesn't happen without a serious catalyst.
And this one came from an unexpected corner of Ford's (F) business. Not trucks or electric vehicles, but from energy storage.
Morgan Stanley is betting big on Ford Energy
Morgan Stanley analyst Andrew Percoco published a note arguing that Ford Energy is a hidden gem that the market has largely ignored.
His key argument: Ford's licensing agreement with Contemporary Amperex Technology, better known as CATL, gives the automaker a rare edge.
It puts Ford in a small group of suppliers that can offer battery energy storage systems (BESS) that qualify as compliant under Foreign Entity of Concern (FEOC) rules.
Related: The Chinese battery giant powering Tesla just raised $5 billion
Those rules matter because customers need compliant systems to qualify for the 30% Investment Tax Credit for energy storage projects.
Percoco put a potential valuation of $10 billion on Ford Energy. He also noted that if the company builds out its capacity and secures a solid order backlog, that figure could eventually approach what Tesla's energy business commands in the market.
The analyst added that he expects Ford to announce supply agreements with large commercial customers, and possibly hyperscalers, within the next few months.
Ford Energy's Kentucky factory is under focus
Ford Energy is a wholly owned subsidiary of Ford Motor, formally introduced earlier in May. The company spent the better part of a year quietly laying groundwork before going public with it.
The plan is to repurpose an existing battery factory in Glendale, Ky., that was previously part of a joint venture with South Korean battery maker SK On, called BlueOval SK.
When that partnership ended, Ford took ownership of two Kentucky facilities. One of them, in Glendale, is now being converted into a production site for battery cells and large storage containers.
Ford is allocating $2 billion for the buildout. Its flagship product is the Ford Energy DC block, a standardized 20-foot containerized storage unit built around 512 amp-hour lithium iron phosphate (LFP) prismatic cells.
It comes in two versions: a two-hour system and a four-hour system. Both feature liquid-cooled thermal management and are designed for 20 years of performance.
Ford is targeting at least 20 gigawatt hours of annual production capacity, with first deliveries planned for late 2027.
At that scale, Morgan Stanley estimates the business could generate $500 million to $600 million in run-rate earnings before interest and taxes (EBIT).
During Ford's first quarter 2026 earnings call, CFO Sherry House described the energy storage business as a "high return growth opportunity."
House emphasized:
"Our strong liquidity position provides us with the flexibility to manage in this dynamic environment and invest in higher return growth opportunities like Ford Energy."
Ford is investing $1.5 billion in it this year, on top of the broader $2 billion commitment.
A key driver for Ford stock
Ford announced the energy storage pivot late last year, and it landed with a thud. The announcement came alongside a nearly $20 billion write-down on the company's EV business.
Skeptics saw it as a company scrambling to do something with idle factories.
However:
- U.S. demand for reliable, grid-scale energy storage is climbing fast.
- The buildout of data centers, the push to integrate more renewable energy, and the need to make the power grid more resilient have all collided to create a genuine supply gap.
- Utilities and developers need systems they can finance, insure, and depend on for two decades.
- They need a supplier with the muscle to honor a warranty claim in year 10.
That is exactly the gap Ford is trying to fill.
Ford has access to battery manufacturing capacity that could be put to better use in a market with stronger growth.
There is also a "Made in America" angle that is increasingly valuable.
According to a report from Energy Storage, FEOC rules and domestic content standards tied to tax credits are pushing utilities and project developers to move away from Chinese-made components.
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Ford Energy's products are fully assembled in the U.S. and designed to meet those requirements.
That gives the automaker a compliance edge at a time when the market is actively scrambling for alternatives.
Ford CEO Jim Farley made a broader point on the earnings call. He said the company expects its software and physical services revenue, which already topped $15 billion last year, to grow at nearly 8% annually through the end of the decade.
The energy business sits squarely inside that growth strategy.
The market is starting to pay attention. Ford stock climbed 6% in a separate session following the Morgan Stanley note.
Whether Ford Energy can hold its own against more established players remains to be seen. But for now, the smart money is watching this one closely.
Related: Ford analyst blames 'unpredictability' for post-earnings swoon
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This story was originally published May 16, 2026 at 8:33 AM.