US Auto: Pivot Toward Battery Storage
US automakers increasingly pivoting from EVs into battery storage. As auto sales and electric vehicle (EV) adoption growth moderates (Fig 1), major automakers are increasingly expanding into battery ...
Chief Investment Office - Hong Kong version9 Jul 2026
  • Slowing U.S. EV demand is prompting automakers to increasingly redeploy battery investments towards higher-growth battery energy storage systems (BESS)
  • Ford announced Ford Energy, a new battery storage business leveraging idle EV battery capacity, targeting at least 20GWh annual deployment by 2027
  • Legacy OEMs, including Ford and General Motors (GM), are reassessing EV capital allocation, following Tesla’s successful expansion into higher-margin energy storage
  • Battery storage offers attractive long-term growth exposure, supported by AI infrastructure demand, renewable penetration and grid modernisation
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US automakers increasingly pivoting from EVs into battery storage. As auto sales and electric vehicle (EV) adoption growth moderates (Fig 1), major automakers are increasingly expanding into battery energy storage systems (BESS), seeking to monetise underutilised battery assets while gaining exposure to structurally attractive end markets. Most recently, Ford Motor Company announced the launch of Ford Energy, a wholly owned subsidiary supplying U.S.-assembled BESS solutions to utilities, data centres and industrial customers, with first deliveries targeted for late 2027. The move mirrors strategies already established by Tesla, which has successfully expanded energy storage into a meaningful profit contributor. Meanwhile, General Motors continues to prioritise EV capacity right-sizing and tighter capital allocation discipline amid softer-than-expected EV demand.

Battery storage emerging as a compelling adjacent growth opportunity. We believe Ford’s announcement could mark the early stages of a broader strategic shift across traditional automakers, with BESS becoming an increasingly important growth pillar. The sector is supported by strong long-term demand drivers including AI-related data centre expansion, renewable integration and rising grid resilience investment. More importantly, battery storage typically offers stronger and more stable profitability than vehicle manufacturing; for reference, Tesla’s Energy Generation and Storage segment has delivered gross margins of c.26% to 28% in recent quarters, compared with roughly 15% to 20% for automotive operations. We believe this makes battery storage an increasingly attractive avenue for automakers seeking to improve returns on battery investments amid a more challenging auto and EV demand environment.

The premier play in energy storage. We view the shift towards battery storage positively, as it reflects improving capital allocation discipline, with automakers reallocating investment towards higher-growth, higher-margin opportunities within the broader electrification value chain, particularly amid a cooling auto market (Fig. 1). That said, following Ford's (F US) more than 50% share price rally after its BESS announcement, we remain cautious on near-term valuation exuberance. While investors are increasingly rewarding automakers with exposure to battery storage, we believe selectivity remains key given rapid battery capacity expansion and intensifying price competition from Chinese manufacturers. Within the automotive battery value chain, Tesla remains the standout, underpinned by its proven execution in energy storage, manufacturing scale and leading position to capture long-term value as the industry expands beyond vehicle manufacturing into broader energy ecosystems.


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