Ford Motor Company is in advanced discussions with Chinese battery maker BYD to source hybrid-vehicle battery cells for use in its non-U.S. assembly plants, according to people familiar with the matter. The arrangement, if finalized, would see Ford integrate BYD’s blade-style lithium iron phosphate battery technology into hybrid versions of its best-selling SUVs and crossovers—models that represent more than half of the company’s global unit volume. The move reflects Ford’s response to softer-than-expected electric-vehicle demand, with hybrid sales up 12% in the past year while full-electric deliveries slipped by 8%. Ford hopes the deal will help it cut cell manufacturing costs by up to 15% and accelerate time to market by relieving capacity constraints at its dedicated EV battery plants.

Building on more than $10 billion already invested in two U.S. battery factories, Ford announced plans to convert its Kentucky facility and expand its Michigan site to produce stationary energy storage cells for homes, data centers and utilities. An additional $2 billion investment will retool assembly lines to support residential Powerwall–style modules and grid-scale systems. Ford projects the storage unit could generate annual revenue of $3 billion by 2030, with gross margins estimated at around 25%—roughly in line with its profitable commercial-vehicle business. The pivot aims to utilize excess cell capacity as EV battery demand plateaus and take advantage of regulatory mandates in key states requiring utilities to add storage to manage renewable intermittency.

Ford shares have advanced more than 40% over the past 12 months, outpacing the broader auto sector’s 22% gain, even as global vehicle production faces semiconductor shortages and raw-material inflation. Despite the rally, Ford trades at a mid-single-digit forward price-to-earnings multiple, roughly half that of some European peers, and offers a dividend yield near 4%. Analysts cite the company’s strong cash flow generation—free cash flow improved by $3 billion last year on lower capital spending—and the benefit of industry-leading cost cuts totaling $8 billion since 2023 as underpinning a bullish valuation case.

CEO Jim Farley acknowledged early missteps in Ford’s electric-vehicle rollout, pointing to rapid price reductions last quarter to move inventory that exceeded plant output by 20%. He outlined corrective actions, including tighter supply-chain controls and a refreshed software platform debuting next year. Farley also confirmed Ford’s return to Formula One in 2026 as a strategic marketing play designed to strengthen its performance credentials ahead of the launch of a new electric supercar in 2027. He reiterated the goal of selling 1 million electrified vehicles globally—including hybrids—by 2030, up from approximately 400,000 this year.