One of the biggest bottlenecks for artificial intelligence (AI) data centers right now is power supply. Power grids cannot keep up with the capacity of data centers coming online, and hyperscalers are having to get creative with their power solutions.
Ford Motor Company (NYSE: F) is entering this market by repurposing its electric vehicle (EV) manufacturing footprint to produce battery energy storage systems. The move helps Ford put its battery-making capacity to work as EV support wanes while data center power demand surges. Here’s why this trend could supercharge Ford stock in the coming years.
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Ford’s pivot from EV batteries to AI power solutions
After over $200 million in manufacturing investments and federal incentives, recent policy rollbacks and shifting consumer preferences have turned the tide for EV manufacturers. With federal tax credits expiring and regulators relaxing emissions standards, automakers that made massive investments in EV infrastructure are now having to pivot.
The build-out of AI data centers presents an opportunity for companies like Ford. That’s because these data centers are straining the electricity grid, forcing hyperscalers to seek a variety of energy solutions to meet this growing demand. And because AI workloads require continuous, high-density power, hyperscalers need power solutions that can smooth out sudden load ramp-ups and provide reliable, baseload power 24/7.
In May, Ford announced the launch of Ford Energy, a wholly owned subsidiary focused on manufacturing utility-scale battery energy storage systems (BESS). This comes amid slowing consumer adoption of EVs and the company’s $19.5 billion write-down of its EV programs last year.
As part of this, Ford will spend $2 billion to repurpose its Glendale, Kentucky, facility, originally a multibillion-dollar EV battery joint venture with SK On, a South Korean EV battery and energy storage systems (ESS) manufacturer. Along with making batteries for EVs, the company will manufacture the Ford Energy DC Block, a 5.45-megawatt-hour containerized grid storage system using stable lithium iron phosphate (LFP) chemistry.
Ford Energy aims to position itself as a domestically based, multi-gigawatt manufacturer of these energy solutions. The company entered a deal with EDF Power Solutions, a five-year framework that could be worth up to $4 billion if all options are exercised. Ford will supply its DC Block system, which EDF will use to power data centers and mitigate renewable intermittency on the U.S. power grid.