Morgan Stanley Optimistic on Ford's Partnership with CATL
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy F?
Morgan Stanley believes Ford's relationship with China's Contemporary Amperex Technology Co. Limited, or CATL, represents an underappreciated strategic advantage for its Energy Storage business. The firm says this relationship positions Ford to become a key supplier of compliant energy storage systems to utility and data center customers in the U.S. Shares of the automaker have jumped about 14% on Wednesday afternoon following the firm's note.OVERLOOKED OPPORTUNITY:Late last year, Ford announced its entry into the energy storage market, and Morgan Stanley argues that investors are overlooking the scale of this opportunity and its potential to improve profitability within Ford's Model e segment.The firm also believes Ford's licensing agreement with CATL is a key competitive differentiator that the market has not fully appreciated. Morgan Stanley sees a meaningful likelihood that Ford signs an energy storage system supply agreement with large commercial customers, and potentially cloud hyperscalers, in the coming months.NEW BUSINESS, RIGHT TECHNOLOGY:Energy storage is a new business for Ford, but Morgan Stanley believes the company has the right technology. Ford's decision to invest $2B into a new Energy Storage business was met with skepticism, which the firm views as understandable given it was announced alongside a $20B write down in Ford's electric vehicle operations. However, Morgan Stanley highlights one clear point of differentiation: Ford is licensing technology from CATL, the leading global manufacturer of energy storage systems.With an increasingly complex geopolitical environment – including tariffs and evolving regulations around foreign entities – the firm sees Ford's structure as an opportunity to deploy capital into a strategic growth area while maintaining operational control and regulatory alignment.PRICE ACTION:In afternoon trading, shares of Ford have jumped about 14% to $13.63.
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Analyst Views on F
Wall Street analysts forecast F stock price to fall
14 Analyst Rating
3 Buy
10 Hold
1 Sell
Hold
Current: 14.480
Low
11.00
Averages
13.65
High
16.00
Current: 14.480
Low
11.00
Averages
13.65
High
16.00
About F
Ford Motor Company develops and delivers Ford trucks, sport utility vehicles, commercial vans and cars, and Lincoln luxury vehicles, along with connected services, including BlueCruise (ADAS) and security. The Company's segments include Ford Blue, Ford Model e, Ford Pro, and Ford Credit. The Ford Blue segment primarily includes the sale of Ford and Lincoln internal combustion engine (ICE) and hybrid vehicles, service parts, accessories, and digital services for retail customers. The Ford Model e segment primarily includes the sale of its electric vehicles, service parts, accessories, and digital services for retail customers. The Ford Pro segment primarily includes the sale of Ford and Lincoln vehicles, service parts, accessories, and services for commercial, government, and rental customers. The Ford Credit segment consists of the Ford Credit business on a consolidated basis, which is primarily vehicle-related financing and leasing activities. Its vehicle brands are Ford and Lincoln.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Software Subscription Growth: Ford Pro's commercial software subscriptions increased by 30% year-over-year to 879,000, significantly boosting profit margins and indicating strong performance in commercial vehicle sales.
- Higher-Margin Vehicle Mix: In Q1, off-road trims accounted for 25% of Ford's U.S. vehicle sales mix, enhancing average transaction prices and contributing positively to the company's profitability.
- Strong Cash Position: Ford maintains ample cash and liquidity to navigate potential recession risks or prolonged high gas prices due to the Iran conflict, suggesting that despite stagnant stock performance, there is potential for near-term upside.
See More
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- Sales Growth Strategy: Ford has launched a promotional campaign called 'American Value' during the first quarter, exceeding Wall Street expectations, aiming to attract consumers through employee discounts, which is expected to increase market share by 0.6% to 13.2% by 2025.
- Inventory Challenges: Despite tight inventory for the F-150, which is not expected to stabilize until the second half of 2026, Ford is working to ensure that its inventory meets consumer demand to maintain sales momentum.
- Profitability Balance: Ford's CFO noted that while promotions can hurt margins, the company has achieved sales growth through lower incentive spending and higher transaction prices for trucks and large SUVs, indicating consumer preference for the Ford brand.
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See More
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- Escalating Job Cuts: The Detroit Three automakers have collectively reduced over 20,000 white-collar jobs since recent employment peaks, representing 19% of their total workforce, highlighting significant challenges faced by the industry due to technological changes.
- GM Leads Layoffs: General Motors has cut approximately 11,000 employees from 2022 to 2023, despite having expanded to 58,000 white-collar workers in 2020, reflecting pressures as the company transitions towards software-defined and electric vehicles.
- AI's Profound Impact: Ford's CEO has stated that artificial intelligence could replace half of all white-collar jobs in the U.S., particularly in repetitive roles such as finance and IT, although positions in emerging areas like autonomous vehicles and cybersecurity are still on the rise.
- Hiring Amid Cuts: Despite layoffs, the three automakers are still hiring, particularly in AI-related fields, with GM planning to recruit over 250 AI positions, indicating a demand for new skills as companies navigate their transformation.
See More
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- GM Leads Reductions: GM has reduced its workforce by approximately 11,000 employees from 2022 to 2023, primarily in its IT department, indicating a reassessment of human resources as the company transitions towards AI technologies.
- Escalating Industry Trends: Ford's CEO stated that AI could replace half of all white-collar jobs in the U.S., suggesting that the industry is undergoing profound structural changes that will require employees with new skills in the future.
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See More
