<\/p>\n
Ford’s stock has been on a wild ride over the past four weeks, rising more than 33% despite Thursday’s nearly 3% decline.<\/p>\n
Ford shares caught fire after the company debuted Ford Energy, the battery storage initiative the company has been quietly working on for about a year. The new partnership with EDF will see the company deliver up to 20GWh of battery energy storage systems for utility-scale and data center customers starting in 2028.<\/p>\n
The agreement with EDF combines \u201cindustrial-scale manufacturing discipline with full lifecycle accountability,\u201d with the venture\u2019s flagship product being a 20-foot containerized 5.45 MWh system using 512 Ah LFP prismatic cells with liquid-cooled thermal management called the Ford Energy DC Block.<\/p>\n
The venture gives Ford some skin in the AI infrastructure game that investors have been eager to pile into.<\/p>\n
\u201cThis agreement with EDF power solutions validates the market\u2019s need for a BESS supplier that combines industrial-scale manufacturing discipline with full lifecycle accountability,\u201d\u00a0said Lisa Drake, president, Ford Energy.<\/p>\n
But while the more than 30% stock increase may seem like an overreaction for more conservative investors, analysts at Morgan Stanley say investors have only priced in part of the benefit from Ford’s new non-automotive business venture. <\/p>\n
Morgan Stanley says Ford’s battery storage business isn’t fully priced into the stock<\/p>\n
Morgan Stanley analysts led by Andrew Percoco are bullish on Ford Energy, but they say the 30% stock increase over the past month represents only part of the value the new battery storage and AI infrastructure play brings to the company. <\/p>\n
“Energy storage systems are becoming a critical part of the US power market, as demand becomes more volatile and peak-heavy, offering modularity, faster deployment timelines, rapid response to sudden load ramps, and the ability to smooth peaks without requiring the overbuild of generation or transmission infrastructure,” Percoco said in a note viewed by TheStreet. <\/p>\n
The firm expects U.S. energy storage system deployments to grow at a 38% compound annual rate over the next five years, reaching more than 279 GWh by 2030, with 169 GWh demand from data centers. <\/p>\n
The sector is so hot, MS analysts believe more companies, like Ford rival General Motors, will dedicate technology and capacity to the segment “given subdued EV demand.”<\/p>\n
But even with the more than 30% increase and the threat that GM will soon enter the same business, Morgan Stanley says investors are still undervaluing Ford Energy. <\/p>\n
“We believe F is currently trading with 20-25 GWh of run-rate ESS demand priced into the stock. While this may seem like a lot, we believe the stock has further room to run if the company continues to add high-quality customers to its ESS backlog, which could bring additional capacity expansion into play (although we do not expect the company to formally announce any capacity expansion anytime soon),” Percoco said. <\/p>\n
Ford forced back to the drawing board with EVs<\/p>\n
Morgan Stanley sees Ford’s pivot to battery storage as a natural outflow of the struggles its EV business has experienced in recent years. <\/p>\n
In a harbringer of just how fragile EV demand in the U.S. is, consumers flocked to dealerships to buy EVs last year, right up until September 30, when the $7,500 EV tax credit expired. But even in the third quarter, during the height of that buying frenzy, customers purchased 90 different EV models; only nine sold more than 10,000 units.<\/p>\n
This is the climate non-Tesla EV makers have to compete in, and it has forced General Motors, Ford, and Stellantis, the Detroit Big 3, to completely reevaluate their strategies.<\/p>\n
\u201cThe vast majority of EVs sell at a rate of far less than 2,000 units a month, or 6,000 units a quarter. In the volume-driven business of automotive manufacturing, low volume is the enemy; EV profitability remains a distant dream for nearly every automaker,\u201d Cox Automotive\u00a0said last year.<\/p>\n
Ford says it is lowering EV production in the near term, though it plans to accelerate by 2028 as it builds its new EV platform. That’s one of the reasons Morgan Stanley is so bullish; the firm believes energy storage is the future. <\/p>\n
“We believe the benefits of battery storage are broader than appreciated,” Precoco said. “As wind and solar energy become an increasingly important part of the US power generation mix (driven primarily by favorable economics, state-level clean energy goals, and federal tax credits that have continued to be extended), storage helps address a couple of key issues: the mismatch between when renewable energy is produced and when consumers want the power, and the inherent intermittency of renewable energy.”<\/p>\n
Related: GM, Ford, Stellantis CEOs go back to the drawing board with EVs<\/p>\n
#Morgan #Stanley #Ford #stock #secret #weapon #fully #priced<\/p>\n","protected":false},"excerpt":{"rendered":"
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