Ford introduces a $2 billion battery storage division for AI data centers.
TL;DR: Ford has introduced Ford Energy, a $2 billion subsidiary focused on producing large-scale battery storage systems for data centers and utilities, utilizing CATL-licensed LFP technology at a repurposed plant in Kentucky. The company has secured a five-year agreement with EDF Power Solutions for up to 20 GWh.
Ford has established Ford Energy, a wholly owned subsidiary specializing in manufacturing large battery energy storage systems for utilities, data centers, and industrial clients. The operation is backed by an investment of approximately $2 billion and repurposes a Kentucky facility originally designed for electric vehicle batteries.
Lisa Drake leads the subsidiary, reporting directly to Ford's vice chair, John Lawler. This move signals a clear indication that traditional automakers in Detroit are anticipating quicker profits from supporting the AI infrastructure boom rather than from producing cars that were initially intended to validate their battery investments.
What Ford Energy produces
The primary product of Ford Energy is the DC Block, a standardized storage system housed in a 20-foot container and based on 512-amp-hour lithium iron phosphate (LFP) prismatic cells. Each unit has a capacity of 5.45 megawatt-hours, with technology licensed from CATL, the leading Chinese battery manufacturer.
Ford plans to produce these systems at its facility in Glendale, Kentucky, which is being converted in light of reduced electric vehicle production plans and the dissolution of its BlueOval joint venture with SK On. The company has also assumed a $3.8 billion Department of Energy loan related to the plant as part of this restructuring.
Deliveries to customers are aimed for late 2027, with an expected annual output reaching at least 20 gigawatt-hours. Ford is not the only automaker pursuing this opportunity; General Motors also announced its entry into grid-scale energy storage earlier this year.
The EDF contract
Just a week after Ford Energy’s official announcement on May 11, the subsidiary secured its first commercial agreement, a five-year framework contract with EDF Power Solutions North America for up to 4 GWh of battery storage annually, amounting to a total of 20 GWh over the contract's duration, with deliveries anticipated to commence in 2028.
Analysts from Morgan Stanley have estimated the energy storage division could be valued at up to $10 billion as a stand-alone entity. While this figure is speculative since Ford Energy has yet to deliver any systems, it showcases the significant demand forecasted by data center and grid operators over the coming decade.
The stock and skepticism
Following the announcement of Ford Energy, Ford's stock price increased by about 20% within 48 hours, rising from below $14 to over $17, then subsequently dropped back to around $14, negating most of those gains.
On June 17, CNBC’s Jim Cramer commented that he believes Ford could become a key player in the battery storage market, though he warned that the impact on earnings would not be seen for several years. He noted that at around $14, the stock appears more appealing than during its peak.
The licensing deal with CATL has come under scrutiny. CATL is listed on a Pentagon document as having potential connections to the Chinese military, leading to questions about whether a U.S.-assembled product based on Chinese battery technology meets federal domestic manufacturing criteria. Ford has asserted that these systems will be assembled entirely in the U.S., while CATL has contested the Pentagon's classification.
Whether Ford Energy can grow quickly enough to be significant alongside the automaker’s still-challenging EV division remains uncertain. Nonetheless, the shift from producing car batteries to grid batteries suggests a belief that the energy storage market will expand more rapidly than the electric vehicle market, at least for the time being.
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Ford introduces a $2 billion battery storage division for AI data centers.
Ford Energy plans to produce grid-scale LFP battery systems at a refurbished plant in Kentucky, with initial deliveries expected by late 2027. EDF has entered into a five-year agreement for up to 20 GWh.