The popularity of SUVs helped Ford Motor Company (F.US) raise annual profit for the second time in the year, and it will take time for AI energy storage profits to be realized

The Zhitong Finance App learned that Ford Motor Company (F.US) raised its full-year profit forecast for the second time in the year, thanks to consumers continuing to buy its high-margin SUV models. The company's much-publicized new energy business is not expected to actually contribute to profits until 2028.

Ford Motor's earnings report on Tuesday showed adjusted earnings per share for the second quarter of 42 cents, higher than analysts' average expectation of 36 cents. The company currently expects profit before interest and tax to reach 11 billion US dollars this year, higher than the previous forecast of 8.5 billion to 10.5 billion US dollars. The average estimate of analysts was about 9.5 billion US dollars.

The increase in profit expectations this time reflects Ford's profit from strong demand for SUVs and pickups, and its competitor General Motors has taken similar steps.

Currently, Ford is shrinking its electric vehicle business, which continues to lose money, while absorbing the cost pressure brought about by tariffs and commodity price increases. High-profit models such as SUVs and pickups have become the company's core profit pillars. In addition, Ford is also investing $2 billion to set up a new energy storage business, but this business may take years to pay off.

Ford said it expects its energy sector's production capacity to reach 20 gigawatt-hours by the end of next year. CEO Jim Farley said on Tuesday that there is room for further expansion of production capacity.

“This layout will place Ford Energy among the leading energy storage manufacturers in North America,” Farley said during an analyst conference call.

It all depends on fuel-powered SUVs and pickups to support profits! Ford's tariff costs are expected to exceed 1 billion US dollars this year

The automaker mitigated the impact of a 10% decline in US car sales in the second quarter by delivering a large number of lucrative Bronco and Explorer SUVs, particularly high-margin models with expensive kits. As the Trump administration relaxes federal fuel efficiency standards and withdraws preferential policies for electric vehicles, mainstream US automakers have increased production of SUVs and pickups with high fuel consumption.

The popularity of SUVs helped offset the loss of profits in the Ford pickup business: a fire at Novelis's aluminum plant in New York last year left its best-selling F-Series pickup truck out of stock. The plant resumed operations in the second quarter, and Ford expects to recover some of its reduced production capacity in the second half of the year.

According to the investor report, the company expects the reduced production value of F series pickup trucks caused by the current aluminum factory fire to recover about 2.5 billion US dollars. This value is at the lower end of the previous estimated range of 3 billion US dollars.

Chief Financial Officer Shirley House said that Ford is expected to incur tariff costs of more than 1 billion US dollars this year, the vast majority of which is due to the company having to import aluminum from overseas after the Novelis aluminum accident.

“We are facing huge tariff costs due to supply disruptions at Novelis aluminum plants and our need to obtain aluminum from outside the US,” House said during a conference call on Tuesday. “Our current tariff costs are mainly focused on aluminum, steel, and imported vehicles.”

Electrification strategy thwarted Ford lays out energy storage to seize AI computing power demand

The news of Ford's entry into the energy storage sector boosted its stock price by more than 40% in May, the biggest monthly increase in 17 years. This traditional car giant is viewed by the market as a potential beneficiary of the AI boom.

The Morgan Stanley report indicates that Ford's energy business could be valued at as much as $10 billion, and predicts that the company is expected to close deals with hyperscale data center operators soon. The core logic is that Ford Energy will be able to provide battery energy storage systems for utility companies, data centers, and large industrial enterprises. This optimistic forecast has fueled fervor among investors.

However, Ford's chief financial officer House said that profits from this new energy business will not be reflected in financial reports until 2028.

In the analysts' conference call, CEO Farley did not respond positively to whether Ford had reached energy storage cooperation with major cloud vendors; he only indicated that the company's energy storage business team was connecting with various potential partner customers.

The reason for Ford's entry into the energy storage business stemmed from a setback in its electric vehicle business. The company is transforming an electric vehicle battery plant in Kentucky to produce energy storage batteries.

The factory was originally part of a joint venture project between Ford and SK On in Korea to build electric vehicle batteries, but the project has now been terminated. Ford accrued $3.6 billion in non-cash expenses in the second quarter, relating to the liquidation of projects previously disclosed.

Ford's electric vehicle sales plummeted 41% in the second quarter due to the company discontinuing production of the F-150 Lightning plug-in pickup truck and preparing for the impairment of its electric vehicle assets of 19.5 billion US dollars.

Ford is adjusting its electric vehicle strategy to focus on lower priced models. The first model is a $30,000 small electric pickup, which is scheduled to hit the market later next year.

After the earnings report was announced, Ford's stock price rose more than 5% after the market. The stock has accumulated a 14% increase since this year, outperforming the S&P 500 index.