Ford Leases Out Unused EV Battery Plant Capacity to Nissan

Ford has leased out part of its Kentucky EV battery plant to Nissan, in a bid to utilize unused capacity. The deal aims to circumvent recent tariff hikes. Despite this, Ford stock dropped over 2% in Wednesday's trading. Analysts have a Hold consensus rating on F stock, with an average price target of $9.59 per share implying 8.62% downside risk.

Ford Motor Company (F) has announced a strategic move by leasing part of its Kentucky Electric Vehicle (EV) battery plant to rival Nissan Motor Co. (NSANY). This partnership aims to utilize the underutilized capacity of the plant, which was originally part of Ford's $7 billion EV investment push in 2021 [1]. The deal is seen as a response to recent tariff hikes, which have posed significant challenges to the automaker's operations.

The move comes amidst a broader shift in the EV market, where demand has cooled and costs have risen. Ford's suspension of full-year 2025 guidance and its $5.07 billion EV loss in 2024 highlight the challenges the company is facing [1]. The company expects another $5 billion loss this year, underscoring the financial strain caused by tariffs and the transition to electric vehicles.

Ford's decision to share its battery plant with Nissan is part of a broader strategy to absorb excess capacity. Nissan, which incurred a $4.5 billion loss in the last reported quarter, is also looking to reduce its tariff exposure by producing batteries locally in the U.S. [1]. This move is part of a broader trend in the industry, with Honda Motor Co., Ltd. (HMC) slashing its EV and software investment target by nearly a third and pivoting towards hybrid vehicles [1].

Despite the challenges, Ford's stock has dropped over 2% in Wednesday's trading, reflecting investor concerns about the company's ability to navigate the current market conditions. Analysts have a Hold consensus rating on F stock, with an average price target of $9.59 per share, implying an 8.62% downside risk [1].

While the partnership with Nissan is a strategic move to mitigate the impact of tariffs, Ford faces significant headwinds. The traditional Ford Blue division, which sells gas-powered vehicles, is showing signs of fatigue, and the company anticipates lower sales of internal combustion engine (ICE) vehicles this year compared to 2024 [1]. Additionally, Ford's ambitious investments in green mobility and autonomous driving technology are taking a toll on its short-term financial flexibility.

However, Ford's Ford Pro division, which serves commercial and fleet customers, is showing robust demand. The integrated offering across vehicles, software, and physical services is gaining traction and could be a major growth engine in the years ahead. The company also has a strong liquidity cushion, with $27 billion in cash and about $45 billion in total liquidity, and a dividend yield of over 5% [1].

In conclusion, Ford's latest move to share its battery plant with Nissan underscores the shifting ground beneath the EV market. While near-term headwinds pose real challenges, Ford's strengths, such as its Ford Pro segment and strong liquidity, support the case for long-term stability. Existing investors may want to hold their positions, while potential buyers should wait for clearer signs of progress in margins, EV strategy, and cost control. Ford stock currently carries a Zacks Rank #3 (Hold) [1].

References:
[1] https://www.nasdaq.com/articles/fords-ev-retrenchment-deepens-buy-f-stock-or-stay-away