Automakers like Ford and GM are jumping into a whole new business where Tesla is a serious player

Key Points Automakers are increasingly investing in energy storage businesses as demand for EV batteries falters. Ford said in December it plans to convert one factory meant for EV batteries to energy storage products, spending $2 billion on top of the nearly $6 billion it invested building the factory. Governments in some states, such as California, are requiring utilities to at least consider investing in energy storage and electricity usage is rising for the first time in years, largely due to growing demand from data centers. U.S. automakers are increasingly entering the energy storage business as they pivot away from electric vehicles and try make use of battery factories that cost billions of dollars. Energy storage uses a lot of the same underlying technology as EV batteries to store power for homes, businesses and even utilities. Tesla has been investing in this area for at least a decade. Others automakers, such as Ford and GM , made significant announcements in 2025, just as uncertainty about the near future of EV sales began to grow. Electricity demand is growing after years of relatively flat prices, largely fueled by the rise of data centers, according to the U.S. Energy Information Administration. Electrification — or gas heaters, stoves and other appliances moving to electric ones — is also a factor, said Ramteen Sioshansi, a professor of engineering at Carnegie Mellon University who studies the electricity industry. But this market is still relatively new, he added, and how much demand there will be in the near future is speculative. "If a lot of auto manufacturers head in this direction, you end up with a glut of supply and not enough demand to absorb it," he said. "It could be a move where the vehicle manufacturers essentially find themselves in the same position they are right now with respect to electric vehicle demand." Battery power Renewable energy sources such as solar panels and wind turbines can have an "intermittency problem," meaning they only generate power when the sun is shining or a breeze is blowing — and that might not be when it's needed. Batteries can fill the gap by collecting and stockpiling electricity to use at another time or sell it back to the grid. Batteries can also collect energy from the grid at times when rates are lower, like at night. Energy-hungry businesses can use that storage to cut electricity costs. "It's a perfectly valid way of operating," said Pete Tillotson, senior research analyst at Benchmark Mineral Intelligence. "And it will form a revenue stream for the majority of assets on the grid." Automakers Ford said in December it would convert a Kentucky battery factory it had recently built with partner SK On to make batteries for energy storage . It also plans to devote some factory space to make cells for residential storage at a factory in Marshall, Michigan. Ford is still using the Marshall plant to make batteries for an upcoming midsize electric truck. It has spent about $10 billion on...

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