Why Ford’s 20 GWh deal hides the prize
Volkswagen tests the profit layer Ford leaves
Ford signed a 5-year framework under which EDF, the French utility, can buy up to 20 GWh of grid batteries for North America.
Meanwhile, Volkswagen connected a small 40 MWh battery in Salzgitter, Germany.
Ford’s deal is 500 times bigger on paper, but the smaller Volkswagen project says more about where the profit is made.
The factory builds the battery once.
Running it is where the real money begins: trading electricity, providing grid services, managing warranty risk, and updating software.
The 20 GWh headline is the trap
Ford and Volkswagen announced their grid storage moves around the same time.
In May 2026, Ford Energy signed a 5-year framework with EDF Power Solutions under which EDF can buy up to 20 GWh of grid batteries, limited to 4 GWh each year. Deliveries will start in 2028.
By contrast, Volkswagen’s Elli plugged a 20 MW, 40 MWh battery into the German grid on 9 March 2026.
Look only at the GWh and Ford looks bigger.
That is the trap.
Shipping a container is one sale. Running a battery is a series of decisions stretched across years, each one shaped by electricity prices, weather, grid rules, safety limits, and customer commitments. The operator learns something new with every dispatch.
That learning adds up.
Anyone can count GWh. Who controls the battery after installation keeps the profit.
Ford has the contract
Ford found a second customer for batteries its EV plan no longer needed.
Ford announced the energy storage pivot in December 2025 and formally introduced Ford Energy in May 2026.
The company committed $2 billion over 2 years to convert Kentucky’s battery factory capacity originally built for an electric car market that grew slower than planned.
Ford Energy’s DC Block is a 20-foot shipping container packed with 5.45 MWh of grid batteries. The cells inside are large 512 Ah LFP batteries. EDF can buy up to 4 GWh a year under the deal. The LFP technology underneath relies on licensing from CATL, China’s largest battery maker.
Ford solved the hardware problem.
Ford’s timing is not random. The US installed 18.9 GW of battery storage in 2025, according to American Clean Power and Wood Mackenzie. The Energy Information Administration projects another 24 GW of utility-scale capacity for 2026.
The market is large enough to absorb factory-scale supply, with utilities and data centers leading domestic demand.
Data centers add weight to the domestic angle. The International Energy Agency expects global data-center electricity demand to more than double to 945 TWh by 2030. Those buyers want capacity and speed the grid cannot match.
Once the container leaves Kentucky, EDF owns every operating decision and every dollar of operating profit.
Morgan Stanley estimates that a 20 GWh annual Ford Energy business could earn $500 million to $600 million of run-rate EBIT (operating profit) by 2028. Hardware can be a real business at that scale.
The deal lets Ford enter grid storage without becoming a power trader.
That bridge is helpful but the destination is somewhere else.
Volkswagen is testing the asset layer
Volkswagen built Salzgitter small on purpose. Scale comes later.
Volkswagen started trading power on EPEX SPOT, Europe's wholesale power market, in July 2023. The Salzgitter battery arrived nearly 3 years later.
The operating stack is the proof point.
Elli’s PowerCenter uses 13 containers, runs inside a virtual power plant, connects directly to wholesale markets, and trades across multiple revenue streams with its own algorithms.
A grid battery has more than one way to earn money.
The simplest is buying low and selling high. Beyond that, the battery can sell frequency response, take balancing contracts, earn capacity payments, or sign flexibility deals with customers. The tough part is picking which market to serve in each hour without wearing out the battery.
Elli is starting with that operating question.
Volkswagen wants to know how much money the battery can earn before wear cuts the profit. One 2024 study found degradation cut yearly net profit by 13% to 24% in the arbitrage cases modeled.
Germany is a useful place to learn this business. Day-ahead price spreads widened from around €30/MWh in 2019 to around €130/MWh in 2024, per Modo Energy. Wider spreads make storage worth more. They also make every dispatch decision more complex.
At today’s scale, Salzgitter project is tiny.
The real value is what Elli learns. The company tests how far a carmaker can go in grid storage.
If Elli proves Volkswagen can operate this battery profitably, the company gets a playbook it can scale. If it fails, it becomes an expensive lesson.
Either way, Volkswagen went after the deeper problem first.
Tesla shows why the asset layer matters
Tesla made grid storage profitable by tying the battery to software, dispatch, customer operations, and market trading.
Tesla has built stationary storage since 2015 and remains the Western benchmark for a full-stack battery business.
Tesla deployed 46.7 GWh of storage in 2025, up 48.7% year over year. Energy revenue reached $12.77 billion, up 26.6%.
Tesla’s Energy Generation and Storage segment reached a 29.8% gross margin in 2025, versus 17.8% for total automotive.
The profit comes from many layers.
Tesla makes Megapacks at its Lathrop, California factory at 40 GWh of yearly capacity. A second US Megafactory in Brookshire, Texas, near Houston, will add 50 GWh of Megapack 3 capacity.
Tesla’s Autobidder software runs the operating stack for third-party battery operators.
Tesla’s long-term supply deals give it buying power newer entrants cannot match.
Volkswagen’s small test points at this stack. The 40 MWh battery looks tiny, but it aims at the right problem.
The container matters but the business is bigger than the container.
Volume and control are different strategies
3 companies. 3 different starting points.
Ford will ship more GWh, while Volkswagen tests the part of storage that decides who keeps the long-term profit.
Ford’s path can grow faster because it starts from a factory and a signed contract. The Volkswagen path moves slower. Operations and trading take longer to learn.
VW also faces a PowerCo problem. European EV demand keeps growing, and VW’s car brands will need more cells. Growing the storage business would fight for the same supply.
The uncomfortable conclusion
This is the test for every OEM storage announcement now.
Is the company just putting cells into containers, or building an operating business around the battery?
The first keeps factories busy but the second creates a storage business.
In grid storage, the second one matters more.
The next 15 years are the business.
P.S. Whenever you’re ready, here are three ways I can help:
1. Battery industry reports
I’ve published two so far: The Battery Starter Kit, to help you get up to speed on the battery industry, and the CATL Company Profile, to help you understand how CATL operates and why it leads the market.
You can find them here: Battery industry reports
Ford is solving a massive overcapacity problem, but do they have a value proposition and business model?
Volkswagen is exploring. Analysis can lead to paralysis. Even more dangerous.
Volkswagen/ Elli acts more like a self integrated asset owner who has also the ability to produce some of the cells themselves. Very interesting position, thanks for sharing!