Ford Motor’s new business, Ford Energy, has its first customer.
On May 18, Ford Energy, a wholly owned subsidiary of Ford, said it signed a five-year “framework agreement” with EDF power solutions North America to make battery energy storage systems for EDF.
EDF power solutions North America is an entity of the EDF Group, a French government-owned multinational electric utility company that produces low-carbon electricity. It especially focuses on using nuclear and renewable energy.
Ford Energy President Lisa Drake said the agreement with EDF power solutions validates the market’s need for a battery energy storage supplier such as Ford, which combines its industrial-scale manufacturing knowledge and experience with accountability.
Details of Ford Energy’s first customer agreement
“We are not simply delivering hardware,” Drake said in a statement. “We are delivering the kind of predictable quality and long-term operational confidence that grid operators and large-scale developers require. Ford Energy was purpose built to serve customers who cannot afford uncertainty in their energy storage supply chain.”
EDF power solutions North America’s CEO Tristan Grimbert said as the company expands it energy storage portfolio, “supply chain reliability and product quality are paramount.”
“Ford Energy’s commitment to domestic manufacturing and its rigorous approach to traceability and lifecycle support align with the standards we hold across our portfolio,” Grimbert said in a statement. “This framework agreement gives us the supply visibility and product confidence we need to execute at the pace the energy transition demands.”
Last December, Ford announced Ford Energy as a new venture into making battery energy storage systems. Battery energy storage systems are large batteries, some as big as shipping containers, used by utility companies and data centers to store energy for use later to stabilize the power grid and to avoid blackouts.
The reason Ford created Ford Energy was to use the full capacity Ford has at new factories in Kentucky and Marshall, Michigan. Those plants were intended to make batteries for electric vehicles, but with EV demand stagnant, Ford had to find a way to fully use the facilities. The plant in Marshall is making EV batteries but will also make smaller energy storage systems for residential use.
How big the deal is and what Ford will supply
In this new agreement with EDF power solutions, Ford Energy spokesperson Jessica Enoch said in an email that EDF power solutions can procure up to 4 gigawatt-hours of Ford Energy DC Block battery energy storage systems each year, for a total potential volume of up to 20 gigawatt-hours over the term of the agreement.
Ford Energy describes the Ford Energy DC Block as a 20-foot containerized energy storage system with a rated capacity of 5.45 megawatt-hour per unit. The system uses lithium iron phosphate prismatic cells and is available in two-hour and four-hour discharge configurations. The DC Block is intended for utility use such as frequency regulation, voltage support, peak load shifting and backup power, to name a few uses.
Why Ford is moving into energy storage now
Ford CEO Jim Farley has said Ford Energy will deploy a minimum 20 gigawatt-hour capacity of battery energy storage systems annually. To put that in perspective, a gigawatt is equal to 1 billion watts. A power plant with a capacity of 1 gigawatt-hour could power about 876,000 households for one year if they collectively consume 10,000 kilowatt-hours each and the plant operates continuously, according to Carbon Collective, an investment adviser focused on climate change.
Enoch said the framework agreement also positions Ford Energy as a key battery energy storage system supplier for EDF power solutions’ growing portfolio of “grid-scale energy storage projects across the United States.”
Farley has said Ford Energy is expected to start making deliveries of the systems in late 2027, but in this deal, the company will start delivering the storage systems to EDF in 2028.
In morning trading, Wall Street reacted to the news with a shrug. Ford’s stock price was down 1.27%, a far cry from last week when the stock surged 20% over two days after Morgan Stanley came out as bullish on Ford Energy.
In a research note published late in the day on May 12, Morgan Stanley’s Andrew Percoco wrote that Ford Energy could generate a 25% gross margin and earnings before interest and taxes of $346 million by 2028 — a year after Ford Energy was expected to start deliveries.
Percoco said that investors are missing an opportunity if they don’t see the value in Ford Energy’s ability to drive improved profits within Ford’s Model-e segment. Even though Ford Energy is a new business for Ford, Percoco said, Ford has the right technology and a competitive edge with its partner, Chinese battery maker CATL.
In his research note, Percoco said there is a “fairly high likelihood that Ford signs an (Energy Storage Solution) supply agreement with large commercial customers, and potentially hyperscalers, over the next few months.”
He also said Morgan Stanley estimates Ford Energy will one day be worth as much as $10 billion on its own.
Jamie L. LaReau is the senior autos writer who covers Ford Motor Co. for the Detroit Free Press. Contact Jamie at jlareau@freepress.com. Follow her on Twitter @jlareauan. To sign up for our autos newsletter. Become a subscriber.
This article originally appeared on Detroit Free Press: Ford Energy lands its first customer in battery storage deal
Reporting by Jamie L. LaReau, Detroit Free Press / Detroit Free Press
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