Ford Motor Co. shares jumped 13% on Wednesday in the company’s biggest single-day gain in about six years, driven entirely by investor enthusiasm for a business that did not exist twelve months ago. The catalyst was a research note from Morgan Stanley analyst Andrew Percoco, published late on May 12, laying out the financial case for Ford Energy, the automaker’s newly launched battery storage subsidiary.
What Morgan Stanley actually said about Ford Energy
Percoco’s note projected that Ford Energy could generate a 25% gross margin and earnings before interest and taxes of $346 million by 2028, roughly a year after the business begins delivering products. He estimated the unit could eventually be worth as much as $10 billion on its own.
The central argument was not just about the numbers. Percoco wrote that the company’s licensing relationship with CATL, the Chinese battery manufacturer widely considered the global leader in the space, represents a competitive advantage the market has been consistently undervaluing. Through that relationship, Ford gains access to proven lithium iron phosphate prismatic battery technology and a pathway to meeting the 55% domestic content requirements that qualify Ford Energy for a 30% federal investment tax credit. That tax credit, Percoco argued, is itself a structural edge over competitors who cannot claim it.
The company stock closed Wednesday at $13.57, up 13.18% on the day.
The business Ford is building
Ford Energy was formally introduced on May 11, though the company had announced its intentions in December alongside a nearly $20 billion writedown of its electric vehicle programs. The pivot redirected plant space in Kentucky, originally intended for EV battery production, toward manufacturing large-scale battery energy storage systems. A separate facility in Marshall, Michigan will handle smaller residential units.
These are not consumer products. The systems Ford Energy will produce are large stationary batteries, some comparable in size to shipping containers, designed to help utility companies and data centers store energy, stabilize power grids, and reduce the risk of outages. The company has committed to deploying a minimum of 20 gigawatt-hours of capacity annually and expects first deliveries in late 2027. The company is investing $2 billion in the business.
CEO Jim Farley told analysts in February that the company has been in active conversations with potential customers and is working toward specific supply contracts for the 2027 capacity window. Percoco echoed that timeline, writing that he sees a strong probability The company signs a supply agreement with large commercial customers, and possibly major technology companies, within the next several months.
The risks still on the table
The bullish case comes with caveats that Percoco did not bury. Ford Energy is projected to post negative pretax earnings in its first year of operations. The path to that $346 million figure runs through 2028, not 2027. And Ford is entering a market where Tesla, LG Energy Solution, and SK On have each been operating for more than a decade. The company has limited experience manufacturing these systems at scale and will be competing against entrenched players from the start.
The $19.5 billion EV writedown that accompanied December’s Ford Energy announcement also shadows the launch. Percoco acknowledged that the market’s initial skepticism was understandable given the timing and the scale of the losses attached to Ford’s Model-e unit, which has been running at roughly $5 billion in annual pretax losses. Ford Energy is being positioned partly as the mechanism that stabilizes that unit’s financial picture over time.
Whether it delivers on that promise will take years to confirm. For now, Wall Street has decided the possibility is worth paying attention to.
