Ford shares jumped about 14% Wednesday after Morgan Stanley said the automaker’s newly launched energy storage unit could become a meaningful value driver, highlighting a potentially decisive edge from a licensing deal with Chinese battery maker Contemporary Amperex Technology Co. Ltd. (CATL). In a note published late Tuesday, analyst Andrew Percoco estimated Ford Energy could be worth roughly $10 billion on a standalone basis if the business reaches scale.
Morgan Stanley’s bullishness centers on Ford’s $2 billion investment in stationary battery storage announced late last year — an initiative unveiled alongside a roughly $20 billion writedown of certain EV assets. Percoco calls Ford one of the few “semi-vertically integrated domestic ESS suppliers” because the company plans to build lithium iron phosphate (LFP) batteries in the United States under license from CATL, giving Ford access to a widely used, lower-cost chemistry that the bank considers best-in-class.
The bank lays out the valuation in concrete terms: a $10 billion enterprise value equates to a 17.5x multiple on about $588 million of EBIT once Ford Energy reaches 20 gigawatt-hours of annual production. Morgan Stanley also sketches a bullish scenario in which the unit could be worth as much as $31 billion. By contrast, the bank values Tesla Energy at about $140 billion on a 30x 2028 EBIT multiple, underscoring how much upside remains for nascent players if they can capture major customers.
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Percoco cautioned that the business will require time and scale to become profitable. Morgan Stanley projects a negative EBIT during the first year of operations, with a path to positive EBIT only by 2028 in its base case. Gross margins are expected to be muted initially, with the firm forecasting a roughly 25% gross margin only once the unit achieves meaningful scale. The note also forecasts robust market growth — a 38% compound annual growth rate in domestic energy-storage deployments through 2030, reaching some 279 GWh — a figure Morgan Stanley attributes mainly to demand from AI data centers and other hyperscale users.
A key strategic element, according to the bank, is Ford’s licensing arrangement with CATL. Building LFP packs in the U.S. using CATL technology could help Ford meet a proposed 55% battery content threshold from suppliers compliant with “Foreign Entity of Concern” (FEOC) rules, enabling eligibility for a 30% Investment Tax Credit under U.S. clean-energy incentives. That compliance would, the note argues, make Ford more competitive when bidding for large-scale contracts with hyperscalers and cloud providers — customers that could materially accelerate Ford Energy’s growth if the company lands even a single major deal.
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Despite the upbeat analysis, Morgan Stanley did not change its Equal Weight rating or its $14 price target for Ford, signaling that the bank still sees execution risks and a need for the unit to demonstrate consistent results. Investors’ swift positive reaction to the note indicates rising appetite for legacy automakers that can pivot into stationary storage, but the path to the multi-billion-dollar valuations Morgan Stanley sketches depends on scaling production, improving margins, and signing sizable customers. Ford’s battery manufacturing footprint, including plants such as its facility in Glendale, Kentucky, will be a crucial element in that race.
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