Ford and General Motors Are Energy Stocks Now
Should car companies become energy companies? Ford and GM -- and Tesla! -- are racing to do just that.
By Rich Smith
Ford Motor Company (F +0.72%) stock took off like a rocket last month, climbing 45% in the last two weeks of May. Ford's given back about half those gains in the June stock sell-off, but why did Ford stock put pedal to metal in the first place?
Because all of a sudden, Ford has decided it's an energy stock.
Ford Motor is electric
A little over three years ago, Ford secured a license from China's Contemporary Amperex Technology Co., or CATL, which permits Ford to manufacture batteries using CATL technology. The original plan, of course, was to make these batteries for Ford electric vehicles (EVs). But now that EV demand in the U.S. has collapsed, and demand for electrical power to run artificial intelligence (AI) data centers has exploded, Ford has struck upon a new idea for how to use its technology license:
Ford will manufacture batteries to store electricity for use by data centers and AI semiconductor factories.
Ford announced the plan in January 2026, promising to build batteries at factories in Kentucky and Michigan, and use them to create a "battery energy storage business." Production would begin in mid-2027, rapidly ramping to produce 20 gigawatt-hours of batteries annually and generating as much as $5 billion in new energy storage revenue by 2030.
Wall Street already loves the idea. In mid-May, Morgan Stanley predicted energy could generate between $500 million and $600 million in annual operating profit for Ford.
General Motors charges in
It was this prediction, by the way, that sparked Ford stock's amazing run last month -- and it seems the lesson wasn't lost on Ford archrival General Motors (GM 0.36%). Last week, GM announced it has a few energy ideas of its own.
GM's first idea isn't exactly original: "vehicle-to-grid" electricity in which owners of GM EVs can plug them into the grid to support the grid during peak demand -- essentially a system of distributed energy storage. GM said last week it is seeking to partner with utility companies on such a project and is already in talks with utility companies in California and Michigan.
Separately, GM is partnering with privately held Redwood Materials to reuse or recycle old EV batteries for utility-scale energy storage.
Finally, GM said it's working on a new battery chemistry that centers on more common (and cheaper) sodium rather than lithium. The new sodium-ion technology has other advantages over lithium-ion batteries -- not requiring cooling to operate at full efficiency, for example -- and may also be simpler and more reliable. GM says it's partnering with Denver-based energy storage start-up Peak Energy to produce sodium-ion batteries beginning sometime after 2028.
This all sounds a bit more scattershot than Ford's simple approach: Build a factory to manufacture batteries, then assemble those batteries into energy storage systems. Then again, the more bets GM makes, the more chances that one of them may strike it rich!
How rich, exactly?
Wall Street's optimism aside, though, how does the math on all this work?
Let's take Ford's estimated "$5 billion" in 2030 battery energy storage revenue, for example. According to data from S&P Global Market Intelligence, Ford currently earns about a 0.8% operating profit margin on its revenues, implying $5 billion in extra revenue might earn Ford an extra $40 million.
That's hardly a large payoff for a new business that will take five years to build!
GM's 6.6% operating profit margin, in contrast, seems to offer more potential for profit should any of the company's several energy bets pay off. Still, there's the question of whether GM is better advised to keep earning 6.6% margins by selling trucks or try to earn even more by selling energy storage? How good a bet is that?
For context, consider the bet Tesla (TSLA +1.18%) made back when it began its own "energy generation and storage" business by buying SolarCity back in 2016. Over the past decade, this business has grown from $1.1 billion in annual revenue to $12.8 billion while also generating very respectable profit margins. In 2017, Tesla EGS earned a 21.7% gross profit margin that has since grown to nearly 30% in 2025.
Long story short, Tesla's energy business today generates nearly twice the gross margin of its EV business. If Ford and GM can accomplish anything similar, it should be well worth the effort.