Ford and GM Enter New Market Dominated by Tesla

• Ford is repurposing factories after investing nearly $6 billion in EV battery production, adding $2 billion more for energy storage conversion amid EV sales dropping from 10% to under 6% of the market in Q4 2024.
• Electricity demand is surging after years of flat growth, driven by data centers with projections showing potential threefold increase by 2028, creating new market opportunities for battery storage systems.
• Automakers face significant challenges competing against established players like Tesla (in energy storage since 2015) due to workforce gaps, different customer bases, and lack of direct experience in the energy storage sector.

Ford and GM Pivot to Energy Storage as EV Demand Softens

Key Developments:

U.S. automakers Ford and GM are redirecting investments from electric vehicles to energy storage systems, leveraging existing battery technology and manufacturing infrastructure. This follows Tesla's decade-long presence in the sector through its Energy division.

Financial Commitments:

• Ford is converting its Kentucky battery factory (built with SK On) to produce energy storage products, investing an additional $2 billion on top of nearly $6 billion already spent
• The company has allocated approximately $10 billion total across Kentucky and Michigan facilities
• GM Energy reported 30% month-over-month revenue growth since launching in January

Market Dynamics:

EV sales declined sharply from 10% of new car market in Q3 2025 to under 6% in Q4. Ford revised its 2030 EV sales forecast from 45% to just 9-18% of total sales, prompting the strategic shift.

Conversely, electricity demand is rising for the first time in years, driven primarily by data center expansion. Research cited by GM and Redwood Materials projects a threefold increase in energy demand by 2028 over 2023 levels.

Products and Applications:

Energy storage batteries address renewable energy intermittency, store off-peak power for cost savings, and provide backup electricity. GM launched its PowerBank residential product in October 2024, competing with Tesla's established Powerwall system.

Market Outlook:

While states like California mandate utility consideration of energy storage, analysts warn of potential oversupply if multiple automakers flood the market simultaneously. Experts note significant differences between automotive and energy storage businesses, including customer bases and marketing requirements. U.S. manufacturing incentives exist through tax credits favoring domestic production over Chinese imports.