MW Ford's stock is the S&P 500's biggest gainer. The carmaker is putting a very Tesla spin on things.
By William Gavin
Investors are cheering on the potential of Ford's new energy business, which aims to serve AI hyperscalers
Ford's new energy business could be a big winner, especially in light of the company's electric-vehicle troubles.
Ford's move to take a page out of Tesla CEO Elon Musk's playbook appears to be paying off, at least with investors.
The Detroit automaker $(F)$ this week officially launched Ford Energy, its new subsidiary focused on providing battery energy-storage systems for data centers, utilities and other industrial and commercial customers in the U.S. Ford aims to deploy at least 20 gigawatt hours of storage products a year, with deliveries targeted to begin in late 2027.
"The convergence of data center growth, renewable energy integration, and grid resilience requirements has created a gap in the market," Ford Energy President Lisa Drake said in a statement. "That is the gap Ford Energy is built to fill."
Ford plans to invest $2 billion over the next two years to develop the business, partially by repurposing a battery plant in Kentucky. Although the plan for Ford's energy business was announced last December, investors were reminded of the news when Morgan Stanley provided a rosy outlook for the business on Wednesday.
Morgan Stanley's Andrew Percoco thinks that Ford Energy could generate a roughly 25% gross margin and earnings before interest and taxes of $346 million by 2028, the year after it expects to starts deliveries.
That's "meaningful" compared with Ford's electric-vehicle business, which is expected to report $4.25 billion in losses before interest and taxes this year, Percoco wrote in a note to clients this week. Ford recently scrapped some of its EV plans.
Ford shares shot up 15.5% in recent afternoon trading Wednesday, making it the best performer in the S&P 500, according to Dow Jones Market Data. Trading volume swelled to 179.5 million shares - more than four times the full-day average over the past 30 days, according to FactSet data - which was enough to also make the stock the S&P 500's most actively traded.
Ford's share price is on pace for its largest percent increase since it soared 23.4% on March 24, 2020, in the early days of the pandemic, according to Dow Jones Market Data. Ford's stock at the time was struggling as demand for new cars dropped, but it then rallied on the market's broader optimism.
See more: Ford's profit jumps as carmaker powers through an EV slowdown
The energy business is an opportunity for Ford to play into the rising demand for energy bolstered by artificial-intelligence hyperscalers, such as Amazon (AMZN). Moody's Ratings this week said it now expects the top six hyperscalers to book capital expenditures of $785 billion this year and nearly $1 trillion in 2027, more than it had forecast in March.
That's good new for Ford, which Percoco thinks is fairly likely to sign a supply agreement with large commercial customers or hyperscalers over the next few months. Percoco, who rates Ford at equal weight, added that Ford has a few advantages over rivals.
For one, thanks to its license with Chinese battery maker CATL, Ford will be using proven battery technology. As a result of its U.S. manufacturing footprint, Ford will not be subject to U.S. rules that restrict companies that make batteries with a certain amount of foreign material from receiving a 30% tax credit, Percoco said.
Despite strong competition, "we believe Ford is in unique position given the strong technology licensing agreement that it is leveraging - which is a technology many customers are already familiar with in the U.S.," Percoco said.
That competition includes Tesla $(TSLA)$, which has been in the energy business since 2015. For Tesla, that's been a solid bet.
See more: How Tesla can turn energy into a nearly $200 billion business
Tesla posted $69.5 billion in automotive revenue last year, a 10% decline from 2024, as vehicle sales fell. At the same time, its energy storage and generation unit had sales of $12.8 billion, a 27% hike, due to a major increase in energy storage product deployments.
Gross margin on the car business in 2025 was 17.8%, lower than the previous two years. Meanwhile, the energy business had a gross margin of 29.8% in 2025, up from 26.2% in 2024 and 18.9% in 2023, according to Tesla's filings.
Tesla's energy business "is now punching well above its revenue weight in terms of profitability, while automotive is the inverse," Adrian Balfour, chair of the advisory firm Envorso, recently told MarketWatch in emailed comments.
-William Gavin
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(END) Dow Jones Newswires
May 13, 2026 15:47 ET (19:47 GMT)
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