Ford a century after him marked the beginning of the modern automobile eraabandoned its original ambitions and sought to break into the electrified future.
The company announced it would cut book value by nearly $20 billion to divest its investments in electric vehicles. This is a staggering loss and represents one of the largest corporate losses ever.
The company, of course, looks at it differently: this step isdecisive redistribution of capital,” the company said Monday, while implementing a series of related strategic changes along with the writedown.
Rotation has a particularly strong effect on Southeast Battery Beltwhere Ford invested in the multibillion-dollar BlueOval battery and electric vehicle plants. An electric vehicle battery plant in Glendale, Kentucky, will lay off about 1,600 employeesand local publication Memphis Commercial Appeal reported that Ford plant in Tennessee will hire about 1,000 fewer workers than previously planned because it now produces gas trucks instead of electric ones.
But while Ford is moving away from electric vehicles, it's getting excited about making batteries, announcing plans to repurpose a plant in Kentucky to help it enter the networked storage market. Over the next two years, the company plans to spend about $2 billion to launch production. lithium iron phosphate cells and pack them in 20-foot containers with a capacity of at least 5 megawatt-hours, which is equivalent to Tesla Megapack. It plans to supply at least 20 gigawatt-hours annually by the end of 2027.
“This strategic initiative will leverage currently underutilized electric vehicle battery capacity to create a new, diversified and profitable revenue stream for Ford,” the company said in a statement. Ford also plans to produce home battery cells at its plant in Marshall, Michigan.
Ford recently struck a deal with partner SK On, a South Korean battery maker, to dissolve their joint venture. Ford will keep its battery plant in Kentucky and SK On at its sprawling BlueOval City complex near Memphis, Tennessee. This means that batteries will still be produced at this plant, but not just for Ford products.
“They've ramped up battery production capacity, and now they need to do something about it,” said Pavel Molchanov, managing director of renewable energy and clean technologies at financial services firm Raymond James. “While demand for electric vehicles is declining, energy storage adoption in the U.S. is growing rapidly.”
Ford's sunny rhetoric about a “customer-centric transition” can't disguise the enormity of the blow to the company's overall business.
As of Sept. 30, Ford's accountants valued the company at more than $47 billion. Ford must now reduce that amount by $19.5 billion to reflect the termination of its joint venture agreement with SK On and the loss of planned electric vehicle models. The company will have to spend money on completion of production of the all-electric F-150 Lightningswitch to production of a long-range gas- and battery-powered model, and retool factories to produce new non-EV models.
The move comes as electric vehicles account for only about 10 percent US new car sales are much lower global figure 25 percent. Although electric vehicle sales reach new records every year, the pace of growth has slowed and there is no reason to expect the situation to improve given recent changes in federal policy.
“Sales of electric vehicles in the US have never met expectations,” Molchanov said. “This was true even when the tax credit was in effect. Now the tax credit is gone, and electric vehicle sales have fallen off the proverbial cliff.”
Tax Credit for Consumer Electric Vehicles ended in September as a result of the Republican Budget Act, removing an incentive that helped reduce or eliminate the surcharge for purchasing electricity compared to a similar gas-powered model. Now the average price of regular gasoline has also increased. fell below $3 per gallon for the first time in four years, and electricity prices for the population grew by 13 percent during the first three quarters of this year, much faster than inflation.
“In terms of raw material prices, this is the worst of both worlds for electric vehicles,” Molchanov said.
Energy storage grows as U.S. electric vehicle market falters
Ford's announcement says a lot about the changing fortunes of electric vehicles and energy storage in the US right now.
Previously, electric vehicles were growing exponentially, and stationary storage units offered modest jobs for leftover batteries. Now, due to the apparent inability of American automakers to produce affordable models and the Trump administration's cuts to federal incentives for electric vehicles, this market is heading toward some decline.
Network battery suppliers, on the other hand, are seeing business growth. Revenues from Tesla's energy division, which produces Powerwall and Megapack home batteries for large-scale storage systems, grew by 67 percent last year compared with 2023 and topped $10 billion for the first time, even as the company's market-leading electric vehicle business lost revenue.
Overall, the US will establish record battery capacity on the grid this year. Although analysts predict some decline over the next couple of years as the industry adapts to new federal anti-Chinese rulesThe development prospects for utilities until 2030 have actually changed. increased by 15 percent since the first half of this year, according to industry group American Clean Power.
Demand from artificial intelligence data centers plays a huge role in this: hyperscalers understand that strategically placed batteries Maybe unlock capacity during critical limited hoursin some cases allowing companies to build data centers years earlier than they would have been able to if they had waited for routine network upgrades. It's no coincidence that Ford is targeting data centers with its new battery products.
The network storage market today is almost entirely dependent on lithium iron phosphate cells produced in China. But when President Donald Trump signed the One Big Beautiful Bill Act this summer, he preserved federal tax incentives for deploying energy storage systems while adding a new bureaucratic regime to force projects to prove they are not sourcing parts from China beyond newly established limits.
Starting in 2026, this will push storage system developers to use American-made batteries. Today there are not many options: LG, which has been producing batteries for electric vehicles in Michigan for many years, has begun production of lithium iron phosphate cells there for online use earlier this year. Tesla, Fluence and others are following suit – in fact, the US is on track to self-sufficiency in cell production by the end of 2026, according to the Energy Storage Coalition.
If the project's developers find themselves in a race to secure tight domestic supplies in 2027 or 2028, Ford could find eager buyers despite its short track record.
However, this is not a guarantee of success. Other companies have spent years building network-attached storage products, eliminating shortcomings, packing more features into smaller sizes, and building relationships with savvy customers. Ford has a reputation for being a reliable manufacturer of pickup trucks, not battery packs.
In other words, Ford is copying Tesla's strategy of using electric vehicles to sell network-attached storage systems, but doing it a decade later and without EV prowess to fall back on.
