Legacy automaker Ford (F) was essentially forced to reconsider its stance in electric vehicles by at least one fundamental shift in the market. But we know that Ford is not getting out of electric vehicles altogether, instead working to set up a potential future in which such cars are popular, or potentially even required, by future market conditions. And that makes Ford’s new plan to step into grid storage all the more interesting. Investors seemed to feel the same way, as they sent Ford shares up fractionally in Friday afternoon’s trading.
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We also heard about the recent breakup between Ford and SK On, a move that actually started the new development for Ford. Ford will be taking one of the battery plants that it got after the breakup and moving it into grid storage batteries instead. Ford calls this effort part of a “…decisive redeployment of capital,” likely because, in part, it sounds better than “massive money sink.”
But Ford is also going to throw some extra cash into the Kentucky plants and start producing lithium iron phosphate cells, piling these into 20-foot containers, and offering them to electric companies to serve as grid storage systems. The resulting giant battery packs will offer about five megawatt-hours of storage, which is on par with a Tesla (TSLA) Megapack. Ford’s plan is also pretty ambitious, as it looks to ship 20 gigawatt-hours annually before 2027 ends.
The Human Cost
And while Ford’s pivot in Kentucky will likely be welcome as it keeps jobs in place, not every place will find such welcome news. Retailers in and around Glendale are looking forward to keeping 2,100 jobs in place at their battery plant, and retailers are wondering how far this deal will go.
Retailers in the area have known boom and bust alike, with one coffee shop, Mountain Mike’s, remembering a time so busy that they ran out of ice. Meanwhile, the switch at the battery plant will likely prompt a drop in business followed by at least some recovery as the plant rehires. But given that the plant was originally expected to employ 5,000 people, the relief is somewhat short-lived.
Is Ford Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on F stock based on two Buys, 10 Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 34.82% rally in its share price over the past year, the average F price target of $13.12 per share implies 2.34% downside risk.
