Ford and General Motors Want In on the Energy Craze. Which Stock Will Win?

The giants of Detroit's automaking industry may have struck gold, and the potential fortune has very little to do with cars. Ford Motor Company (F +0.21%) and General Motors (GM 0.66%) are repurposing inventory and facilities to capitalize on the demand for electricity from AI and data centers. It's a fast-growing segment and a potentially massive moneymaker for both. With their newfound purposes, which stock will win?

Ford was the first to move, and it did so decisively. Ford Energy was launched in May of this year, and it will convert plants in Kentucky and Michigan to build battery energy storage systems. Ford Energy could generate as much as $500 million in operating profits by 2030.

GM is converting one of its plants in Tennessee to produce cheaper sodium-ion cells, expand battery recycling, and expand vehicle-to-grid capabilities. Through strategic partnerships, the retooling of existing assets will be much less expensive than Ford's estimated $2 billion investment. While GM's strategy is broader, it won't start generating much new revenue until 2028.

Which automaker is the better energy stock?

As it stands right now, Ford has a clearer path to generating significant new revenue and to do so imminently. The new revenue stream also looks profitable. GM is diversifying its energy strategy, but I'm not sure it's as clear-cut as Ford's. Ford already has a five-year supply framework deal signed with EDF Power Solutions, giving it a powerful head start.

In the short- to intermediate-term, Ford will win, but over the course of a decade or more, GM's broader strategy could pay off; there's too much uncertainty today to make that call. Both companies are making smart moves here by pivoting away from the hefty losses and tepid demand from electric vehicles to capture the surging energy needs of the AI industry.