Ford takes its first big step toward being an energy business

By William Gavin

Ford just inked a deal with a French electric-utility company

Ford is branching out from its core car business with a new energy division and a bigger focus on software and services.

Ford is pushing forward with plans to broaden its reach, including with a new energy division.

Ford (F) on Monday said it had signed a five-year agreement focused on renewable energy with the North American division of EDF Group, a French electric-utility company. It's the Detroit carmaker's first public deal since it formally launched the division last week.

The deal gives EDF's North American business the ability to purchase up to 4 gigawatt hours of Ford's battery energy-storage systems a year, or 20 GWh overall, with deliveries expected to begin in 2028. That would afford EDF the right to buy a significant chunk of Ford's capacity, at least in the early days of the business.

Ford has said it plans to deploy at least 20 GWh of storage products a year and aims to begin shipping out its energy-storage products to some customers in late 2027.

The agreement provides "the supply visibility and product confidence we need to execute at the pace the energy transition demands," Tristan Grimbert, who leads EDF's North American unit, said in a statement.

Ford plans to invest $2 billion over the next two years to develop its energy business, which mimics a similar effort at rival carmaker Tesla (TSLA). At 20 GWh, Ford could generate between $500 million and $600 million of run-rate earnings before interest and taxes, according to Morgan Stanley.

Ford has a few advantages over competitors that got off to a faster start, according to Morgan Stanley, including that it can rely on reliable technology through its license with Chinese battery maker CATL (CN:300750). It can also get some tax benefits thanks to its domestic manufacturing footprint.

See more: Ford's stock paces the S&P 500. The carmaker is putting a very Tesla spin on things.

The company plans to cater mostly to commercial and industrial customers in the U.S., including artificial-intelligence hyperscalers.

Ford's stock is up almost 10% over the past five days, after investors' enthusiasm for the company's plan to broaden its business was dampened by a broader market selloff on Friday. The stock slid 2.8% on Monday.

See more: The 'Munificent Seven': Why energy stocks are the best way to play the AI build-out, says former Goldman strategist

In addition to announcing the energy deal, Ford on Monday said it would introduce a new heavy-duty pickup truck and an all-electric van in Europe. It also intends to launch five new passenger cars in the region by the end of 2029. The carmaker also outlined a plan to make software a bigger part of its commercial-vehicle business in Europe.

Separately, Ford said it was in early talks with North American and European governments to support their defense programs. Although nothing has been finalized, conversations with those governments have been "productive," Ford said.

-William Gavin

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05-18-26 1811ET