EVs aren’t really working out for Ford, so now it’s chasing the AI boom instead.
The Detroit auto giant said on Monday it would pull back from electric vehicles in a move that would cost the company $19.5 billion.
In addition to scrapping planned electric models and building more hybrids, Ford said it would repurpose its EV battery factory in Kentucky to build batteries to power data centers and energy infrastructure.
The Mustang maker added that it would invest $2 billion to scale the new energy storage business, which it said would “leverage currently underutilized electric vehicle battery capacity.” Ford plans to deploy at least 20 gigawatt-hours of energy storage systems by the end of 2027, which is roughly equivalent to the power used by 2,000 US homes for a year.
It comes as the race to build ever more powerful AI models fuels a data center boom across the US, putting pressure on the electricity grid.
Federal estimates suggest data center power demand is expected to as much as triple over the next three years, as tech giants like Meta, Microsoft, and OpenAI pour tens of billions of dollars into AI infrastructure.
EVs, meanwhile, are heading in the other direction. Demand has cratered in recent months after buyers rushed to purchase electric vehicles before the end of the $7,500 federal tax credit in September, and automakers are rolling back investments and betting on hybrids as they gear up for an EV winter.
Ford said the factory at Glendale, Kentucky, which the US automaker built as part of a joint venture with Korean battery company SK On, will produce commercial batteries for the data center industry. Another battery plant in Michigan will produce smaller units for residential use, Ford added.
The Tesla battery play
Ford is following in the footsteps of rival Tesla, which operates a thriving energy storage business. Elon Musk’s automaker raked in over $10 billion last year from selling batteries to support the grid and power people’s homes.
Tesla’s Megapack commercial batteries have been used by Musk’s startup xAI at its massive “Colossus” supercomputer in Memphis, Tennessee. In May, the AI startup reportedly deployed 168 Megapacks to help stabilize the electricity supply at the site, which is one of the largest data centers in the world.
Ford’s bet on energy storage comes as the company overhauls its wider EV strategy.
The Blue Oval announced on Monday it would cancel plans to build some large electric vehicles, and turn its F-150 Lightning electric pickup into an “extended range” EV with an additional gas generator.
Ford CEO Jim Farley told Bloomberg on Monday that the move was the result of the EV market in the US shrinking and “the customer changing their decision.”
“The EV market in the US went from 12% of the industry to only five, and that really, in the end, was the big decider for us,” he said.
