Short molecules, long electrons

Ford and the new currency of power

When Ford Energy emerged a couple of months ago, Wall Street immediately asked what it might now be worth.

Ford’s shares had been languishing, and analysts quickly began modelling whether large-scale battery storage could provide the company with a new source of growth. Morgan Stanley’s Andrew Percoco suggested the business could ultimately be worth around $10 billion. Ford CEO Jim Farley was more expansive, describing energy storage as a “high growth, high margin, anti-cyclical market development for Ford”.

The investment case is interesting. But we think Ford Energy is fascinating on a much deeper level. We think it signals that the currency of industrial power is shifting from owning the molecule to securing the electron.

Few companies are more closely associated with the industrial age than Ford. In one of our favourite films, Modern Times, Chaplin’s Little Tramp struggles to survive an economic system increasingly organised around factories, standardisation and mass production. Ford became almost synonymous with that model, and with the internal-combustion engine that powered it. More than a century later, the company that helped turn fossil fuels into mass mobility is making a serious bet on storing electricity.

For most of the modern industrial era, the ultimate currency of power was the molecule. Coal, oil and gas powered factories, transport and economic development. Molecules fuelled economies and helped win wars. Companies and countries able to extract, transport and control them possessed an obvious strategic advantage.

A barrel of oil is stored energy which can sit in a tank, cross an ocean and be consumed months later. Electricity has historically been much more perishable, with supply and demand needing to be balanced almost instantaneously. Batteries can change that fundamental characteristic because they allow energy to move forward through time.

Not only can power produced when it is abundant be stored for later use, but batteries can also smooth fluctuations in demand, absorb sudden spikes and reduce pressure on constrained grid connections. A connection that might otherwise be insufficient can effectively behave like a larger one because the battery acts as a buffer between supply and consumption.

That is particularly important for the next wave of AI infrastructure. Chips were the bottleneck of the first AI boom. It looks as though power may be the bottleneck of the second. Thanks to large scale battery farms called BESS’s, sudden peaks in hyperscaler demand can be buffered rather than forcing the electricity system to be designed around the highest conceivable moment of consumption.

As Alex Shoer of GridVest argued recently on the Cleaning Up podcast, batteries are becoming indispensable wherever electricity demand is rising. Baroness Worthington offered a particularly elegant analogy: “Batteries are to electricity what the fridge is to food.” Refrigeration did not produce more food, but it changed the economics of food by separating the moment of production from the moment of consumption. Batteries can do something similar for electricity.

Consider the electric car. Millions of EVs are already moving around the world. We classify them as vehicles because that is the industry from which they emerged. But physically, every EV is also a sizeable mobile energy-storage unit that happens to have wheels attached. Most cars spend most of their lives parked. As vehicle-to-grid technology develops, a parked car can potentially store electricity when it is plentiful, power a home during an outage or return energy to the grid when demand rises.  

Today, how we produce energy has also become intensely ideological. Oil, nuclear, wind, solar and electric vehicles have all accumulated political identities of their own. Storage, however, is more promiscuous. A battery doesn’t care whether the electron it holds came from a solar farm, nuclear reactor, hydroelectric dam or gas turbine.

That helps make storage remarkably bipartisan. Climate advocates want it because it enables more renewable power. National-security advocates want resilient domestic energy. Utilities need stability. AI companies need capacity. Consumers simply want electricity that remains available and affordable.

Which brings us back to Ford.

There is a certain symmetry to this transition, and we chose Ford as a hook because few companies are more closely associated with an industrial age built on our ability to extract, transport and convert molecules into motion at unprecedented scale. But the century ahead will be defined increasingly by how intelligently we can connect, store and time what we produce.

If Ford Energy is a sign of anything, it’s that we’re moving from an industrial system organised around the possession of fuel to one organised around the availability of power.