Ford Motor Company (F +6.34%) stock is off to the races.
Shares of the Detroit automaker soared 13.2% Wednesday. They're up another 7.5% through 12:10 p.m. ET today -- and Ford Energy is the reason.
Image source: Getty Images.
What is Ford up to in Energy?
Ford announced the creation of its new Ford Energy subsidiary Monday. One day later, the move won plaudits from Morgan Stanley analyst Andrew Percoco, who made some bold predictions:
Combined with cutbacks at Ford's Model-e electric vehicles unit, the analyst says Ford Energy could reverse losses at the EV division. Beginning production a few months from now at its factory in Kentucky, Ford Energy will lose money in 2027, then turn profitable in 2028, generating perhaps 25% gross profit margins and a $346 million operating profit in that year. Additional profit might come from investment tax credits as the company's batteries will be 55% U.S.-made under federal guidelines.
Upon reaching full capacity, Ford plans to produce 20 gigawatt-hours of energy storage batteries annually, enough to power 17.5 million homes for a year, reports the Detroit Free Press.
Utility customers and artificial intelligence data centers would be the primary buyers of Ford's giant batteries, turning Ford into a de facto AI stock in the minds of many investors.
NYSE: F
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What's next for Ford stock?
All this lies in the future for Ford, of course. But here's the part that might interest investors most of all:
If everything goes as planned, Percoco believes Ford can build a $10 billion business out of Energy, growing the company's current $54 billion market cap by nearly 20%. While there's no guarantee this will happen, with Ford stock trading below 6x free cash flow and paying a 4.4% dividend yield today, it's a good bet that Ford stock is heading higher.
