The US battery industry is pivoting from electric vehicle cell production to energy storage systems that serve AI data centers and the grid. This shift reflects new demand patterns, shifting policy incentives, and the strategic need for domestic ESS capacity to support an AI-powered economy.
AI Boom Reshapes Battery Manufacturing
Manufacturers are converting factories originally meant to supply EVs into production lines for Energy Storage Systems. CRU data shows ten North American facilities have redirected capacity that could have powered about two million vehicles toward ESS projects. The immediate cause is rapid appetite for reliable power at AI data centers while EV sales growth has softened, prompting firms to reallocate capital where near-term demand is clearer.
Energy Storage Systems and Key Players
Energy Storage Systems combine modular battery cells with power electronics and management software to deliver backup power, load shifting, and grid services. For AI data centers, ESS provide short-term ride-through during outages and longer-duration support to manage peak demand from compute-heavy workloads.
Industry moves include Ford converting a Kentucky facility for stationary battery work, General Motors evaluating ESS cell lines, and Stellantis partnering with Samsung SDI to add domestic ESS cell capacity. Tech giants and hyperscalers are also contracting for large systems to protect compute operations.
Market Impact and Policy’s Influence
Tesla illustrates the market pivot. Its energy generation and storage revenue rose about 27 percent while vehicle revenue softened, highlighting the commercial pull of stationary storage. Policy played a role as well. Changes to tax incentives and emissions standards have reduced some near-term support for EVs, making ESS a more attractive manufacturing target under existing federal programs like the Inflation Reduction Act.
Longer term, domestic ESS production affects AI resilience and grid integration of renewables. Prioritizing stationary storage capacity supports uninterrupted AI operations and strengthens grid stability as data centers scale. That framing links industrial strategy to future energy systems and suggests policy choices will continue to shape where batteries are made and for what purpose.
