Automakers Ford and GM have moved into energy storage to compete with Tesla

As U.S. automakers move away from electric vehicles in favor of multibillion-dollar battery factories, they’re getting more into the energy storage business.

Energy storage uses many mainstream technologies, such as EV batteries, to store power for homes, businesses, and even utilities.

Tesla has been investing in this industry for at least ten years. Other automakers, e.g Ford and GMmade major announcements in 2025, just as uncertainty about the immediate future of EV sales began to grow.

According to the US Energy Information Administration, electricity demand is rising after years of relatively flat prices, largely due to the growth of data centers. Electrification — or the conversion of gas heaters, stoves and other appliances to electricity — is also a factor, said Ramtin Sioshansi, a professor of electrical engineering at Carnegie Mellon University.

But the market is still relatively new, he added, and it’s speculative how much demand there will be in the near future.

“If a lot of automakers are going in that direction, you’re going to have a lot of supply and not enough demand to accommodate it,” he said. “This could be a move that automakers are in right now with respect to electric vehicle demand.”

Renewable energy sources like solar panels and wind turbines can have an “intermittency problem,” meaning they only produce power when the sun is shining or the wind is blowing, and it may not be when it’s needed. Batteries can fill the gap by collecting and storing electricity for use at another time or selling it back to the grid.

The batteries can also collect power from the grid when rates are low, such as at night. Energy-hungry businesses can use this storage to reduce electricity costs.

“It’s a very sound way of working,” said Pete Tillotson, senior researcher at Benchmark Mineral Intelligence. “And that creates a revenue stream for most of the assets in the network.”

Ford said in December that it will convert a Kentucky battery plant it recently built with partner SK On batteries for energy storage. It also plans to devote factory space to making residential storage cells at its Marshall, Michigan plant.

Ford is still using the Marshall plant to build batteries for its upcoming midsize electric truck. It has spent about $10 billion on plants in Kentucky and Michigan and will spend another $2 billion to develop its energy business, according to the company.

Tesla’s energy division has been around since he became CEO in 2015 Elon Musk introduced the company’s Powerwall and Powerpack batteries. It was a bright spot for Tesla as its own EV sales and market share declined. Margins in that business are double that of Tesla’s car business, and its revenue is now about 20% of the EV maker’s total.

Ford’s cross-country rival, General Motors, founded GM Energy a few years ago, and then launched a Tesla-like residential solar product called the PowerBank in October 2024. Last year, he announced that he would become a partner. Redwood materials using old and new EV batteries to store energy.

This was reported by GM Energy in October sales increased fivefold Since January, the monthly income growth has been 30%. In addition to PowerBank batteries, the division sells charging adapters and technologies for using the vehicle itself as a backup battery for the home.

The cost of battery storage systems is significantly lower than what was estimated about 15 years ago, Sioshansi said.

And everyone has a guaranteed customer base. In some states, utilities must at least consider using energy storage California has set energy conservation goals.

Residential market batteries like the Tesla Powerwall or GM PowerBank can supplement a rooftop solar panel, act as a backup power source for lights out, or help sell excess power to the grid. But the relatively high cost of these systems to homeowners is limiting demand, Sioshansi said.

Commercial uses vary. Demand from businesses such as data centers is expected to increase. GM and Redwood materials are cited Department of Energy Research It shows that by 2028, the demand for energy will increase three times compared to 2023.

Power-intensive data centers may see energy storage as a necessary solution in times of scarcity.

Meanwhile, US EV sales are expected to drop from about 10% of the new car market in the third quarter of 2025 to 6% in the next quarter. According to Ford, in 2023, the company expects EV sales to account for about 45% of new car sales by 2030. Now the forecast is 9% to 18%, Ford spokeswoman Emma Berg told CNBC.

But energy storage is a completely different business than selling cars. Although the basic technology of the batteries is the same, they are technically quite different; vehicle batteries must be optimized for their light and compact form factor, while batteries for energy storage, for example, are not.

“They are very different products,” said Siochansi. “The customer and how to market and sell these products looks different than what a company likes to learn, say, GM.”

Ford has no direct experience with energy storage, Tillotson said. However, he said he has experience working with CATL, the world’s largest battery manufacturer, which supplies battery technology to the Ford Marshall plant.

The problem is that these firms will have to compete with established players.

“And then you’ve got a relative skills gap — finding the workforce that can produce these very complex advanced technologies against a competitor that has mastered large-scale and large-scale productivity,” Tillotson said. “It’s going to be tough. It doesn’t mean I don’t think the market can’t get there in the U.S., but it’s going to take a relatively long time to get there if they can’t find the labor.”

For firms like Ford, one carrot is the push for US manufacturing. In the energy sector, there are tax credit incentives for projects that exclude certain countries that are considered “foreign entities of concern.” In the case of energy storage, this means China, which is the world’s largest producer of energy storage technology.

“It’s a big incentive to move to this technology,” Tillotson said.