Automakers Ford and GM jump into energy storage, competing with Tesla

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.”

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.”

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 both the Kentucky and Michigan factories and is spending another $2 billion to grow the energy business, according to the company.

Tesla’s Energy division has been around since 2015, when CEO Elon Musk unveiled the company’s Powerwall and Powerpack batteries. It has become a bright spot for Tesla, as its own EV market sales and share have fallen. Margins in that business are about double those of Tesla’s automotive business, and its revenue is now about 20% of the EV maker’s total.

Ford’s crosstown rival General Motors founded GM Energy several years ago, then released a Tesla-like residential solar product called the PowerBank in October 2024. Last year, it said it would partner with Redwood Materials to used both old and new EV batteries for energy storage.

GM Energy said in October that sales had quintupled since January, with 30% month over month revenue growth. Apart from the PowerBank batteries, the division also sells charging adapters and tech for using the vehicle itself as a backup battery for a home.

The cost of battery storage systems is significantly lower than forecasts were projecting about 15 years ago, Sioshansi said.

There is also an all but guaranteed customer base. Utilities are required by law in some states to at least consider deploying energy storage, and California has set energy storage targets.

Residential market-batteries, such as the Tesla Powerwall or GM PowerBank, can supplement a solar panel on the roof, act as a backup power source for blackouts or help with selling excess power back to the grid. But the relatively high cost of these systems for homeowners is liable to limit demand, Sioshansi said.

Commercial uses vary. Demand from businesses like data centers is expected to surge. GM and Redwood Materials cited Department of Energy research showing a potential threefold jump in energy demand by 2028 over 2023 levels.

Data centers that need a lot of power could see energy storage as a needed solution in the face of the shortfall.

Meanwhile, EV sales in the U.S. dropped from about 10% of the new car market in the third quarter of 2025 to just under 6% the following quarter. Ford said in 2023 the company was expecting EV sales to be about 45% of new car sales by 2030. Now the forecast is 9% to 18%, Ford spokesperson Emma Bergg told CNBC.

But energy storage is a very different business from selling cars. Though batteries share the same underlying technology, they are somewhat different technically; vehicle batteries have to be optimized for lightweight and compact shape and those for energy storage do not, for example.

“They’re significantly different products,” Sioshansi said. “The customer, and how you need to market and sell these products, is going to look different compared to what a company like, take GM as an example, is accustomed to doing.”

Ford has no direct experience in energy storage, Tillotson said. However, he added, it does have experience working with CATL, the world’s largest battery maker, which is providing battery tech for Ford’s Marshall factory.

The challenge is that these firms will have to compete against established players.

“You’ve then got relative skills gap — finding the workforce to be able to produce these quite complicated cutting-edge technologies against a competitor that has mastered scale and performance at scale,” Tillotson said. “That will prove challenging. And that’s not to say that I don’t think the market could get there in the U.S., but it would have to take a relatively long time to get there unless they can find a workforce.”

One carrot for firms like Ford is a push toward U.S. manufacturing. There are tax credit incentives in the energy industry for projects that avoid certain countries considered “foreign entities of concern.” In the case of energy storage, that means China, which is the world’s largest producer of energy storage tech.

“That’s the big incentive to shift towards that technology,” Tillotson said.