Image credit: Lisa Martine Jenkins
Earlier this week, Ford Motor Company—arguably the most iconic U.S. automaker—began to make strides into the energy sector. The company, which revolutionized auto manufacturing a century ago with the assembly line, announced plans to repurpose some of its “underutilized” EV manufacturing lines for advanced energy storage systems.
Ford aims to transform its capacity at the Glendale, Kentucky plant to produce storage systems exceeding five megawatt-hours, with a target to commence operations in 2027. This initiative marks the launch of a new Ford energy storage business; the company plans to invest approximately $2 billion over the next two years, driven by the increasing demand for battery energy storage solutions from sectors like data centers and infrastructure supporting the electric grid.
This move represents a notable shift, with a growing number of manufacturers—including LG Energy and SK On—repurposing their existing capacities built up during a more optimistic era for EV sales.
The elimination of EV subsidies by the Trump administration last summer has resulted in battery manufacturers facing excess capacity, as the energy storage sector experiences a growth spurt due to supportive legislation like the GOP’s One Big Beautiful Bill. This has left the full value of tax credits intact until 2033, making batteries increasingly crucial for powering data centers amidst record load growth.
According to Daniel Finn-Foley, director of energy storage at Clean Energy Associates, it makes sense for an EV battery manufacturer to branch into stationary storage. “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 explained to Latitude Media.
From Density to Lifecycle
Lee Larson, an investor at VC firm Piva Capital, notes that the transition from electric vehicles (EVs) to battery energy storage systems (BESS) is not purely a trend but a response to fundamental differences in priorities. “EV batteries require high gravimetric energy density to maximize range, while BESS prioritizes cycle life to ensure long-term value,” he explains.
In EVs, watt-hours per kilogram define performance, necessitating around 1,000 cycles that could translate to approximately 300,000 miles. In contrast, for energy storage, the focus shifts to the value metric of dollars per cycle. The leading cells can now achieve around 8,000 cycles or more, enhancing the economic viability over a 20-year lifespan.
This shift signifies a move from prioritizing density to lifecycles, leading to a demand for physically larger cells. This transformation necessitates retooling the cell assembly lines to accommodate thicker electrodes and different materials, marking a significant investment journey as manufacturers shift from producing batteries suitable for vehicles to those designed for grid storage.
The NMC to LFP Macro-Story
The transition is less daunting for manufacturers already employing lithium iron phosphate (LFP) for their EV batteries. LFP, prioritized by China, became the preferred choice for both stationary storage and EV batteries only recently. Most U.S. factories have historically favored nickel manganese cobalt (NMC) due to its dominance in Western manufacturing.
Switching from NMC to LFP involves not just altering the internal chemistry but also modifying production machinery to accommodate different cell shapes. According to Ryan Gibson, a venture partner at VC firm Eclipse, the investment required for this transition can be significant. “When you’re changing the fundamental form factor of the cell, you’re going to be reinvesting considerable capital,” he states.
Ford’s announcement highlights their plans to produce LFP prismatic cells for the new storage initiative along with battery energy storage system modules and 20-foot DC container systems. The company is already integrating LFP batteries into its EV line-up, including the highly popular F-150 Lightning truck, discontinued as part of this recent pivot.
This evolution in the market underscores the broader narrative surrounding the transition from NMC to LFP, which has been occurring even before the recent policy challenges against EVs. Larson notes, “Most of the non-Chinese players were already grappling with low capacity utilization on their NMC lines.” This vital transition indicates the growing recognition of LFP from a cost-performance standpoint.
The rapid adaptation of EV manufacturers to embrace BESS serves as a testament to the resilience of the battery industry. Finn-Foley points out the industry’s ability to navigate through shifts such as supply crunches and sudden changes in material preferences. “This is an industry that is constantly evolving, and people underestimate its creativity,” he remarks. Energy storage continues to assert itself as a crucial aspect of grid resiliency, reinforcing the adaptability embedded within the supply chain.