Carmakers Pivot to Battery Storage as EV Demand Slows

Automakers and battery suppliers scramble to repurpose factories amid weak U.S. electric vehicle sales.

Apr. 15, 2026 at 10:04am

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An abstract, colorful image with sweeping, blurred lines representing the motion of an electric vehicle, conveying the industry's pivot from EVs to energy storage systems.As automakers shift focus from electric vehicles to energy storage systems, the industry navigates a complex and costly transition.Today in Nashville

Carmakers and battery companies facing a weak U.S. market for electric vehicles are scrambling to repurpose battery factories to make energy-storage systems to fuel AI's thirst for power instead. But converting plants to new types of batteries won't be easy, nor will the demand for energy storage materialize fast enough to absorb a glut of unused factory space for EV batteries.

Why it matters

The expected surge in demand for electricity and energy storage comes at an opportune time for automakers like General Motors and Ford Motor and their battery suppliers, who have invested over $100 billion in battery factories to feed a U.S. electric-vehicle market that has been decimated by policy changes. However, the predicted energy storage boom won't be enough to offset the bust in demand for EV batteries.

The details

Converting factories to the type of battery chemistry that many energy storage systems use will take time and money, and require the companies to delve into a technology that today is dominated by China. Demand for stationary batteries in North America will hit 76 gigawatt-hours this year, but the auto industry's investment binge on EV battery capacity has left it with far more factory space than that - roughly 275 GWh. While storage demand is expected to nearly double over the next five years, to 125 GWh, that still won't be enough to mop up the excess capacity installed for the auto industry.

  • In March, the GM-LGES joint venture said it was spending $70 million and retraining workers to make battery cells for storage at its plant south of Nashville.
  • In December, Ford Motor disclosed it would repurpose some underused factory space in Kentucky to make storage batteries.

The players

General Motors

An American automaker that has invested heavily in battery factories, including a joint venture with LGES to produce batteries for storage systems.

Ford Motor

An American automaker that is spending $2 billion on a new battery-storage division over the next two years to 'create a new, diversified and profitable revenue stream'.

LG Energy Solution (LGES)

A battery arm of the Seoul-based LG Group that is converting three of its factories in North America to produce batteries for storage systems.

Bob Lee

The head of North America for LG Energy Solution, who expects the battery business in the United States to continue to struggle with excess capacity due to the EV bust.

Kurt Kelty

GM's battery chief and a former Tesla executive, who says the company is committed to building a battery manufacturing industry and supply chain in the U.S., whether it's for EVs or storage systems.

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What they’re saying

“Like any other industry that goes through a difficult period like this, I don't think it's going to be all rosy.”

— Bob Lee, Head of North America, LG Energy Solution

“Whether it's for EVs or storage systems, it really doesn't matter.”

— Kurt Kelty, Battery Chief, General Motors

What’s next

Automakers and battery suppliers will need to continue investing in converting their factories to produce batteries for energy storage systems, which could take up to 18 months and cost several hundred million dollars per facility. They will also need to navigate the dominance of Chinese battery technology and supply chains, as well as trade barriers like tariffs on Chinese-made materials.

The takeaway

The pivot to energy storage represents a critical diversification strategy for automakers and battery companies facing a slump in electric vehicle demand. However, the transition will be complex, costly, and will not fully offset the excess capacity built up for the EV market.