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Would Ford's Energy Business Help It Reduce Auto Cycle Risks?
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Key Takeaways
Ford is developing Ford Energy as a startup to diversify revenues beyond the auto cycle.
F plans 20 GWh capacity from 2027, targeting surging data center and grid storage demand.
Ford leverages CATL-backed LFP tech and tariff advantages to offer end-to-end energy solutions.
Ford Motor Company (F - Free Report) is building its Energy business, which could become one of its most strategic growth pillars. Positioned as a startup within the company, this emerging business is designed with a short payback period and a clear mission to diversify revenue streams while reducing reliance on the traditional automotive cycle.
At its core, Ford Energy leverages the company’s manufacturing strength and cost advantage in lithium iron phosphate or LFP batteries to create scalable energy storage solutions. This comes at a time when demand for battery storage is surging, driven by rapid data center expansion and increasing grid stability needs across regions like California, Texas and Florida. Both consumers and enterprise users, especially data centers, are fueling this explosive growth.
Unlike the slower pace typical of the auto industry, energy storage presents a faster path to scale. Ford believes that it can build facilities more quickly and ramp up revenues at a significantly accelerated rate. The company is already engaging customers and working toward securing contracts tied to its planned 20 gigawatt-hour capacity starting in 2027 and beyond.
Technologically, Ford holds a meaningful edge. Through its collaboration with CATL and licensed access to advanced LFP technology, deployed within its own manufacturing plants, the company can avoid the high tariffs associated with imported LFP batteries. This also positions it ahead of competitors relying on more expensive locally produced lithium battery solutions.
Beyond manufacturing, Ford is aiming higher up the value chain. Rather than acting as a contract battery producer, the company is positioning Ford Energy as a customer-facing, end-to-end solutions provider. The vision is to manage not just sales, but also long-term servicing and support to create deeper customer relationships and recurring revenue opportunities.
Strategically, this move aligns closely with Ford’s Pro business and plays to its long-standing strengths in industrial-scale production and trusted brand relationships. Utilities, grid operators and large energy buyers are responding positively, viewing Ford as a reliable partner with a proven track record.
With battery costs expected to commoditize over time, Ford’s current technological and manufacturing advantage offers a critical window of opportunity. Early customer enthusiasm suggests the company’s expansion into energy could become a powerful adjacency to help future-proof its business while opening the door to a faster-growing, high-demand market. F sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Automakers Reflecting a Broader Shift Toward Energy
Tesla's (TSLA - Free Report) revenues from the Energy Generation and Storage business are on a robust growth trajectory on the back of the strong reception of its Megapack and Powerwall products. This segment stands out as Tesla's most lucrative, boasting the highest margins. Over the past three years, energy storage deployments have witnessed a CAGR of 168%. With Tesla’s plans to begin production of Megapack 3 and Megablock to meet escalating demand, deployments are expected to continue their upward trajectory.
In October 2022, General Motors Company (GM - Free Report) unveiled Ultium Home and Ultium Commercial, which formed an integrated suite of energy management solutions. These offerings operate under a different business unit known as GM Energy. In July 2025, it entered into a non-binding memorandum of understanding with Redwood Materials to fast-track the rollout of energy storage systems powered by both newly manufactured U.S.-made GM batteries and second-life battery packs sourced from GM electric vehicles. The partnership represents a meaningful move to extend GM’s advanced battery capabilities beyond electric vehicles.
F’s Price Performance, Valuation and Estimates
Ford has underperformed the Zacks Automotive-Domestic industry in the last six months. Its shares have gained 15.4% compared with the industry’s growth of 27.9%.
Image Source: Zacks Investment Research
From a valuation perspective, F appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.31, lower than the industry’s 3.43.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for F’s 2026 and 2027 EPS has moved up a penny in the past 30 days. The Zacks Consensus Estimate for F’s 2027 EPS has moved down a penny in the past seven days.
Image Source: Zacks Investment Research
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Would Ford's Energy Business Help It Reduce Auto Cycle Risks?
Key Takeaways
Ford Motor Company (F - Free Report) is building its Energy business, which could become one of its most strategic growth pillars. Positioned as a startup within the company, this emerging business is designed with a short payback period and a clear mission to diversify revenue streams while reducing reliance on the traditional automotive cycle.
At its core, Ford Energy leverages the company’s manufacturing strength and cost advantage in lithium iron phosphate or LFP batteries to create scalable energy storage solutions. This comes at a time when demand for battery storage is surging, driven by rapid data center expansion and increasing grid stability needs across regions like California, Texas and Florida. Both consumers and enterprise users, especially data centers, are fueling this explosive growth.
Unlike the slower pace typical of the auto industry, energy storage presents a faster path to scale. Ford believes that it can build facilities more quickly and ramp up revenues at a significantly accelerated rate. The company is already engaging customers and working toward securing contracts tied to its planned 20 gigawatt-hour capacity starting in 2027 and beyond.
Technologically, Ford holds a meaningful edge. Through its collaboration with CATL and licensed access to advanced LFP technology, deployed within its own manufacturing plants, the company can avoid the high tariffs associated with imported LFP batteries. This also positions it ahead of competitors relying on more expensive locally produced lithium battery solutions.
Beyond manufacturing, Ford is aiming higher up the value chain. Rather than acting as a contract battery producer, the company is positioning Ford Energy as a customer-facing, end-to-end solutions provider. The vision is to manage not just sales, but also long-term servicing and support to create deeper customer relationships and recurring revenue opportunities.
Strategically, this move aligns closely with Ford’s Pro business and plays to its long-standing strengths in industrial-scale production and trusted brand relationships. Utilities, grid operators and large energy buyers are responding positively, viewing Ford as a reliable partner with a proven track record.
With battery costs expected to commoditize over time, Ford’s current technological and manufacturing advantage offers a critical window of opportunity. Early customer enthusiasm suggests the company’s expansion into energy could become a powerful adjacency to help future-proof its business while opening the door to a faster-growing, high-demand market. F sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Automakers Reflecting a Broader Shift Toward Energy
Tesla's (TSLA - Free Report) revenues from the Energy Generation and Storage business are on a robust growth trajectory on the back of the strong reception of its Megapack and Powerwall products. This segment stands out as Tesla's most lucrative, boasting the highest margins. Over the past three years, energy storage deployments have witnessed a CAGR of 168%. With Tesla’s plans to begin production of Megapack 3 and Megablock to meet escalating demand, deployments are expected to continue their upward trajectory.
In October 2022, General Motors Company (GM - Free Report) unveiled Ultium Home and Ultium Commercial, which formed an integrated suite of energy management solutions. These offerings operate under a different business unit known as GM Energy. In July 2025, it entered into a non-binding memorandum of understanding with Redwood Materials to fast-track the rollout of energy storage systems powered by both newly manufactured U.S.-made GM batteries and second-life battery packs sourced from GM electric vehicles. The partnership represents a meaningful move to extend GM’s advanced battery capabilities beyond electric vehicles.
F’s Price Performance, Valuation and Estimates
Ford has underperformed the Zacks Automotive-Domestic industry in the last six months. Its shares have gained 15.4% compared with the industry’s growth of 27.9%.
Image Source: Zacks Investment Research
From a valuation perspective, F appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.31, lower than the industry’s 3.43.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for F’s 2026 and 2027 EPS has moved up a penny in the past 30 days. The Zacks Consensus Estimate for F’s 2027 EPS has moved down a penny in the past seven days.
Image Source: Zacks Investment Research