Ford and GM Shift From EVs Toward Battery Energy Storage

Ford announced this week that it will spin off a subsidiary called Ford Energy to develop and sell battery energy storage systems. The new unit will supply utilities, industrial customers and data centers. It expects to make its first deliveries in late 2027.

The company will repurpose unused production lines at a plant in Glendale, Kentucky, that had been slated to manufacture electric vehicle batteries. Ford took a $19.5 billion write-down on its EV programs late last year after scrapping some current and next-generation models in favor of greater emphasis on hybrids.

The announcement led to a 13 percent increase in Ford's stock price, its largest one-day gain in years. In December, the company identified battery energy storage as one of its high-margin opportunities.

Motors said last year it would work with a battery recycler and energy storage system maker to build batteries for energy storage. In March, it said it would repurpose an EV battery plant in Tennessee with its partner to produce energy storage system batteries.

A Stellantis collaboration with a South Korean battery maker began producing batteries in Kokomo, Indiana, in 2024. Some of that production has since shifted to energy storage. Eleven battery cell manufacturing plants are being retooled for energy storage, according to a March count by BloombergNEF.

Eight of those plants are in the United States.

Growth in battery storage has been driven in part by demand from data centers that support artificial intelligence. Batteries can provide direct power, backup supply and help manage large power fluctuations associated with AI training and cooling systems.

The storage systems can also reduce demand on the electrical grid, lowering costs for data centers and other users. This benefit has been noted in communities that have expressed opposition to new data center construction. A researcher at a firm focused on battery supply chains said that if the data center market keeps expanding, it makes sense for automakers to pivot in this direction.

The researcher added that there is a strong push to build data centers in the United States to maintain its position in AI. Another academic researcher observed that if automakers cannot generate profits from storage or EVs, they would prefer losses in storage because it does not compete with their gasoline vehicle business.

The shift takes advantage of continued federal support for commercial battery storage projects. Legislation passed last year removed equivalent support for EV sales while retaining incentives for storage. Those tax credits also encourage eventual use of batteries made with materials from the United States.