One of the biggest American automakers is shifting away from EVs to focus on AI

Ford is making a strategic shift, redirecting resources from electric vehicles to focus on battery energy storage systems, driven by the growing energy demands of data centers and the need to support the electric grid. The company plans to repurpose its Kentucky EV battery plant for this new venture.

With a $2 billion investment planned over the next two years, Ford aims to produce lithium-iron phosphate (LFP) battery systems. The goal is to achieve an annual capacity of 20 GWh by 2027, positioning the automaker alongside competitors like Tesla and General Motors in the expanding energy storage market.

Ford intends to leverage its existing manufacturing capabilities at the Kentucky facility to produce these battery storage solutions. These systems, utilizing the less expensive LFP batteries, are designed to cater to data centers, which are critical for AI operations, and to enhance the stability of the electricity supply chain.

According to the company, the Kentucky site will be transformed to manufacture advanced battery energy storage systems with a capacity of 5 MWh or greater. Production will encompass LFP prismatic cells, battery energy storage system modules, and 20-foot DC container systems. Ford anticipates having initial capacity online within 18 months, aiming to secure a significant share of the U.S. battery energy storage systems market. Deliveries are expected to begin in 2027.

Ford will utilize technology licensed from CATL, a Chinese battery-cell manufacturer, in the production of these LFP batteries.

This move into the energy storage sector places Ford among other automotive manufacturers already active in this space. Tesla, led by Elon Musk, has been selling energy storage devices for a decade and is currently installing approximately 10 GWh quarterly. General Motors (GM) also provides a variety of energy storage solutions for both residential and commercial applications.

In a related announcement, Ford, SK On, SK Battery America, and BlueOval SK have entered into a joint venture disposition agreement. Under this agreement, a Ford subsidiary will independently own and operate the Kentucky battery plants, while SK On will fully own and operate the Tennessee battery plant independently. Separately, Ford will utilize BlueOval Battery Park in Marshall, Michigan, to produce smaller Amp-hour cells for residential energy storage solutions. This Michigan plant remains on schedule to begin manufacturing LFP prismatic battery cells in 2026 to power Ford’s upcoming mid-size electric truck, which will be the first model on the new Universal EV Platform.