Ford Shares Jump 6% on Analyst Praise for Energy Storage Strategy
"Ford’s licensing agreement with CATL is an underappreciated strategic competitive advantage." — Morgan Stanley Analyst Andrew S. Percoco
Ford Motor Co. shares climbed 6% on Wednesday after a Morgan Stanley analyst highlighted the potential of the company's energy storage business to boost profitability in its Model e electric vehicle segment.
Key Strategic Advantage
Morgan Stanley analyst Andrew S Percoco described Ford's licensing agreement with Contemporary Amperex Technology Co Ltd (CATL) as an underappreciated strategic competitive advantage for Ford's energy storage business.
According to Percoco, the relationship with CATL positions Ford as one of the few semi-vertically integrated domestic energy storage system suppliers in the United States. Ford's access to CATL's lithium iron phosphate technology allows the company to meet Foreign Entity of Concern compliance requirements, which are necessary for customers to qualify for the 30% Investment Tax Credit on energy storage projects.
Financial Outlook
Morgan Stanley estimates that Ford Energy could generate $500 million to $600 million of run-rate earnings before interest and taxes (EBIT) at 20 gigawatt hours of production capacity.
Percoco also expects that Ford will likely announce energy storage supply agreements with large commercial customers and hyperscalers over the next few months.
Broader Context
Ford announced a $2 billion investment into the energy storage business in late 2024. This investment coincided with a $20 billion write-down in the company's electric vehicle business. Year-to-date, Ford shares are down 2.75%.