Earlier this week, Ford Motor Company — arguably the most iconic automaker in the U.S. — began to inch into the energy space. The company, which a century ago revolutionized auto manufacturing through its use of the assembly line, announced plans to repurpose some of its “underutilized” EV manufacturing lines, and use them to build advanced energy storage systems instead.
The automaker said it will change over EV capacity at its plant in Glendale, Kentucky, to manufacture storage systems of five-plus megawatt-hours, which it hopes to start bringing online in 2027. This will be the starting point for a new Ford energy storage business; it plans to invest roughly $2 billion in the next two years “to capture the large demand for battery energy storage from data centers and infrastructure to support the electric grid.”
This is the latest, and most high-profile, example of a pivot that has seen a growing group of manufacturers, including LG Energy and SK On, repurposing some of the capacity they built up when U.S. forecasts for EV sales were rosier. (Fellow automaker GM is also participating in the trend, but instead of repurposing lines, it is giving some of its new and used EV batteries to Redwood Energy to deploy in hybrid storage solutions for data centers.)
The Trump administration’s elimination of subsidies for EVs last summer is leaving battery manufacturers with more capacity than they can hope to deploy in the short term. At the same time, the energy storage industry is experiencing some tailwinds; the GOP’s One Big Beautiful Bill left the full value of its tax credits intact until 2033, as batteries become more important to powering data centers and meeting record load growth.
So, according to Daniel Finn-Foley, director of energy storage at Clean Energy Associates, it’s only logical for an EV battery manufacturer with the requisite expertise, factories, and supply chain already in place to get into the stationary storage business as well. “If you already have a battery plant up and running, converting that to stationary storage is an effort to preserve some of the economic value of that facility when it may otherwise have to close or scale back production,” he told Latitude Media.
The shift, however, is neither cheap nor particularly easy. Analysts estimate the conversion can cost up to a third of a facility’s total capex and take up to 18 months — a timeline reflected in Ford’s plan, which doesn’t see storage capacity coming online until 2027.
From density to lifecycle
As an investor at VC firm Piva Capital, Lee Larson has been in many conversations with both battery companies and automakers about “the shift away from EVs and towards stationary storage,” a trend he says everyone has seen and is trying to understand.
He says that the key element of the shift is the fact that EVs and BESS have a fundamental difference in priorities: EV batteries require high gravimetric energy density to maximize range, while BESS prioritizes cycle life to ensure long-term value.
“In EVs, the watt-hours per kilogram define your range and performance, but EVs only need 1,000 cycles, which, depending on your energy density, could be 300,000 miles of lifetime range,” Larson said. “For energy storage, the metric of value is dollar per cycle… and the leading cells can now get 8,000 cycles or more, which improves the economics over a 20-year lifetime.”
This pivot from prioritizing density to lifecycles drives a shift toward physically larger cells, which require some retooling of the cell line for thicker electrodes and different additives, as well as the replacement of the pack assembly lines to build bigger grid-ready racks instead of flat, thin batteries that can fit into an EV.
The NMC to LFP macro-story
The transition is considerably easier for manufacturers already producing EV batteries using LFP, a chemistry that China has long prioritized, but that did not become the preferred alternative for both stationary storage and EV batteries globally until the early 2020s. Most U.S. factories, however, are built for NMC chemistries, which dominated Western manufacturing in the late 2010s; they largely only started the slow transition to using LFPs after Tesla incorporated them into its standard-range EVs in late 2021.
Unlike LFP cells, which typically use a prismatic form factor for storage, NMC cells are often produced as pouch or cylindrical units. Ryan Gibson, a venture partner at VC firm Eclipse, where he’s helped build companies including sodium-ion battery manufacturer Peak Energy, says this makes things harder, as switching lines from NMC to LFP requires changes not only to the internal chemistry but also to the machinery used to shape the cells.
“When you’re changing the fundamental form factor of the cell, you’re going to be reinvesting considerable capex…It’s a huge hill climb,” Gibson said. “But it’s very hard to build an energy storage product or cell business if you’re not shipping prismatic LFP. So, if your goal is to enter that market and you’re sitting on old capex for old chemistries that can’t sell into that market, you sort of have to switch over.”
In its announcement, Ford said it’s planning to produce LFP prismatic cells for its new storage business, as well as battery energy storage system modules and 20-foot DC container systems. The company had started introducing LFP batteries for its EVs in 2023, including for its F-150 Lightning trucks; the latter, which is the electric version of one of the best-selling cars in the U.S., was scrapped as part of Monday’s pivot.
Broadly, according to Larson, this EVs-to-storage battery trend is the continuation of the necessary transition from NMC to LFP that was already happening in the market before the policy headwinds against EVs materialized. “Over the past couple of years, most of the non-Chinese players were already struggling with relatively low capacity utilization on their NMC lines,” he said. “The big, broader macro-story here is the rise and dominance of LFP from a cost performance perspective.”
The EV manufacturers’ relatively quick embrace of BESS is also a manifestation of the battery industry’s resilience and ability to adapt to “seismic shifts in the market,” according to Finn-Foley. Just in the past seven years, he noted, the industry went through shifts including a supply crunch that occurred because demand was being eaten up by incentives within South Korea; the sudden shift to LFP batteries from NMC chemistries; and a 10x spike and drop of lithium prices.
“This is an industry that is constantly shifting, and people underestimate the creativity of developers in terms of reducing cost and getting manufacturing online,” he said. “Energy storage is one of the most important tools for grid resiliency. So it’s appropriate that the supply chain itself would be resilient as well. Resiliency is in the DNA of the storage industry itself.”
