Automakers make cars—it’s in the name. But lately, politics, current events, and Wall Street’s latest preoccupation, artificial intelligence, have them looking a lot more like energy companies. The pivot, analysts say, could give US auto manufacturers struggling through a transition to electric vehicles an easier path over the next few years. Whether it works will come down to the same technology that automakers once promised would power the majority of their lineups: batteries.

An official announcement from Ford this week that it would officially spin off a subsidiary called Ford Energy only made the trend more pronounced. Ford Energy will focus on battery energy storage systems (BESS) and will sell them to utilities, industrial customers, and data centers. It plans to make its first deliveries in late 2027, the company said. Ford plans to repurpose unused production lines in a plant once slated to manufacture electric vehicle batteries in Glendale, Kentucky.

Investors liked the plan so much that the announcement led to a 13 percent jump in stock price, its largest gain in a single day in years.

It’s a (slight) turn of fortunes for Ford, which took a massive $19.5 billion write-down on its EV programs late last year as it scrapped some current and next-generation EVs in favor of a renewed emphasis on hybrids. A shift toward battery storage, rather than EV batteries, capitalizes on continued federal support for commercial battery storage projects, just as last year’s GOP-led legislation nixed the same support for EV sales. Plus, those tax credits for battery storage projects incentivize manufacturers to eventually transition to all-American batteries, made of all-American materials.

In December, Ford CEO Jim Farley counted the company’s burgeoning battery energy storage among its “high-margin opportunities”—a blessed contrast, probably, with the notoriously thin profit margins in the carmaking business. Ford will be helped along by its four-year-old partnership with Chinese battery manufacturer CATL, which should continue to lend its manufacturing expertise.

Other automakers, many of whom have already backed away from ambitious EV transition timelines, have already gotten in on the act. Rival General Motors said last year that it would work with battery recycler and energy storage system maker Redwood Materials to build batteries for energy storage. In March, it said it would work with its partner LG Energy Solution to repurpose an EV battery plant in Tennessee to make energy storage system batteries. A Stellantis collaboration with South Korean battery maker Samsung SDI began producing batteries in Kokomo, Indiana, in 2024, and has already pivoted some of that production to energy storage. (Stellantis is reportedly looking to get out of that joint venture.)

Tesla’s energy storage business is the elder statesman, at more than a decade old. Growth in its Powerwall (battery storage for homes) and Megapack (battery storage for utilities and commercial facilities) sales has, in recent years, helped to compensate for a drop in EV sales, though last quarter saw a sudden drop in energy revenue. Still, Tesla is moving forward with its plans to launch a Houston facility dedicated to a new, larger Megapack later this year.

In total, 11 battery cell manufacturing plants are being retooled for energy storage, according to a March count by BloombergNEF, with eight of those in the US.

Drive Time

One reason investors are so bullish about battery energy storage is their continued enthusiasm for AI. AI companies need data centers, and data centers need energy. Batteries are a great fit for data centers, says Shan Tomouk, who leads battery energy storage research at Benchmark Mineral Intelligence, a research firm focused on battery supply chains. Batteries can help directly power the very energy-hungry centers, which constantly run servers and other hardware, but also the cooling systems that keep them functioning.

The storage systems can also be a fit for data centers that mostly depend on other energy sources, like natural gas. Battery energy storage systems can serve as a backup power source if something goes down and can help data centers manage large and wild power fluctuations related to AI training. They can also kick in to help reduce demand on the grid, lowering costs not just for data centers, but everyone else who depends on the same system—an important upside in communities already hostile to the tech.

“If the huge market of data centers keeps growing every year, it does make sense for automakers to pivot,” Tomouk says. He expects it will. “In the US, there’s a real drive to build data centers, to keep the US as the number one in terms of AI.”

For automakers backing away from EVs, there’s another possible upside to battery storage, even if the pivot doesn’t completely work out. “If automakers aren’t making money from storage and not making money from EVs, they would prefer not to make money from storage because they’re not competing with their own gas car production,” says Gil Tal, who directs the EV Research Center at UC Davis’ Institute of Transportation Studies. “It makes perfect sense, unfortunately.”