US auto industry bets on battery storage for new revenue

The auto industry is no stranger to the battery game. Now it’s developing chemistry with a new and fast-growing sector: energy storage systems (ESS).

The ESS market is an appealing one for automakers for numerous reasons. They recently took multibillion-dollar writedowns on EV losses after consumer demand fell following the loss of federal EV tax credits. At the same time, the AI data center boom has caused electricity demand to skyrocket—bringing added relevance to technology that allows users to capture and store energy for later, especially with growth in renewables. US energy-storage demand is projected to grow at a compound annual growth rate of 38% through 2030, The Wall Street Journal reported, citing Morgan Stanley.

Automakers need only look at one of their rivals to see the revenue opportunities energy storage can offer: It’s Tesla’s fastest-growing and most-profitable business segment. Tesla’s revenue from storage and energy generation rose 26.5% to $12.8 billion last year, TechCrunch reported. And Wall Street analysts estimate the unit will generate $18.3 billion in revenue this year, about a fifth of the company’s total revenue, with nearly 30% gross margins, according to Reuters.

General Motors and Ford have both recently laid out plans to capitalize on these trends by entering the grid-scale energy storage market.

“This is another way to diversify the business,” Adam Bernard, founder and principal of consultancy AutoPerspectives, told Morning Brew, “and it leverages expertise they’ve already got, which is building energy-generating hardware.”

Sodium content

In 2025, GM announced an energy storage partnership with battery recycler Redwood Materials using both new and second-life GM battery packs. The GM-supplied batteries already are powering a microgrid in Nevada for AI infrastructure company Crusoe. The companies pointed to accelerating demand for electricity, driven in large part by the construction of new AI data centers, to explain the move.

“The market for grid-scale batteries and backup power isn’t just expanding, it’s becoming essential infrastructure,” Kurt Kelty, GM’s VP of battery and sustainability, said in a statement at the time. “Electricity demand is climbing, and it’s only going to accelerate. To meet that challenge, the US needs energy storage solutions that can be deployed quickly, economically, and made right here at home.”

Automakers have also established home energy businesses, selling products like bidirectional chargers and stationary battery storage solutions, to support EV sales and open new revenue streams. They’re pitching these offerings to consumers as ways to become less reliant on the US electric grid, save money on electricity, and unlock the full potential of EVs as energy sources that can send power to users’ homes and back to the grid.

At an event in June, GM executives detailed a vision in which “electric vehicles, batteries that power them, and the country’s power grids work together.”

“In the past, major technology shifts were limited by slow processors or internet speeds. Today, the real bottleneck is energy,” the company said in a blog post. “We are developing batteries for large-scale energy storage systems for utilities and major power users, while leveraging our connected electric vehicles to feed power back into the local, residential grids.”

GM has partnered with startup Peak Energy to develop sodium-ion battery cells for grid-scale storage systems; GM will make the cells, and Peak Energy, which claims to already have over $1 billion in commercial orders, will manufacture the systems. Unlike the battery chemistries that are optimal for EVs—those that have high energy density and relatively lower weight to ensure as much range as possible—stationary energy storage “demands longevity, high cycle and calendar life, and intense cost-efficiency,” according to GM.

“What we’re going to be growing is the sodium-ion cell manufacturing business,” Kelty told us. “That’s the real growth area that you’ll see from us over the next several years. There’s a really good reason for that: The electricity demand right now is just tremendous.”

GM’s sodium-ion cell innovation is an ideal fit for grid-scale applications, Kelty explained, because it can help drive down costs thanks to advancements that allow the battery cells GM is developing to withstand continuous cycling at high temperatures, allowing passive cooling and eliminating the need for a cooling system.

The first pilot line of the sodium-ion cells GM and Peak Energy are co-developing is slated to go into production in 2028, with mass production starting sometime after that.

Co-developing the technology with a partner that will manufacture the ESS products allows GM to enter a growing market in a capital-efficient way, CFO Paul Jacobson said on the automaker’s latest earnings call in July.

“The ability to scale is something that we think is going to be cost-effective, while at the same time we don’t have to invest billions of dollars in capital to do it,” he said. “We’re going to be cautious rather than going all in into a hyper-competitive business.”

GM also has a battery-making joint venture with LG Energy Solution, which produces EV batteries and, following a $70 million investment earlier this year, LFP battery cells for energy storage systems.

Pivoting

Ford’s shares jumped as much as 45% in May on the announcement of Ford Energy, a grid-scale battery-storage business unit aimed at utilities and hyperscalers in which Ford is investing $2 billion, per the WSJ.

The subsidiary will manufacture battery energy storage systems “for utilities, data centers, and large industrial and commercial customers in the United States,” according to Ford, with plans to deploy 20 gigawatt hours annually. The first customer deliveries are slated for late 2027.

“US demand for dispatchable, bankable energy storage is accelerating. The convergence of data center growth, renewable energy integration, and grid resilience requirements has created a gap in the market,” Ford Energy President Lisa Drake wrote in a blog post. “Utilities and developers need storage systems they can finance, insure, and depend on for decades.”

The flagship product will be the Ford Energy DC block, “a standardized 20-foot containerized battery energy storage system” with LFP prismatic battery cells, available in two different configurations. Ford is repurposing an EV battery plant in Kentucky to assemble the systems.

Based on what’s known about Ford’s new business at this point, including an agreement with its first customer, one JPMorgan analyst estimated that Ford Energy could generate more than $4 billion in annual revenue.

As for why US automakers need new revenue streams at a time when they’re commanding roughly $50,000, on average, on each new-vehicle sale, the answer goes beyond lackluster EV demand. For one thing, post-pandemic, the industry has lost about a million new-vehicle buyers.

“Between unpredictable consumer demand and unpredictable tariffs and unpredictable natural events that might disrupt the supply chain, there’s plenty of chaos to go around,” Bernard said. “Anything you can do to add a little stability to your business plan is good news.”