The Big Pivot – March 23, 2026
U.S. electric vehicle sales have dropped, but that doesn’t mean that EV battery factories will go to waste
In early 2025, it appeared that the wave of domestic electric vehicle battery production was unlikely to ebb anytime soon. TechCrunch reported that U.S.-based EV battery plants had mushroomed from just two such facilities before the pandemic to 34 that were planned, under construction or operational. eeDesignIt cited 10 factories that were due to begin production over the course of the year; combined they would “potentially nearly [double] the nation’s annual battery production capacity to over 420 gigawatt-hours.”
Fast-forward to early spring 2026, and the outlook is quite different. EV sales in the U.S. have dropped 41% year-over-year, although they’re surging in Europe. EVs’ share of the overall U.S. vehicle market remained flat at 8% between 2024 and 2025. What happened to the EV market, and what will happen to billions of dollars’ worth of battery plants?
In part, the sales decline is due to a change in federal policy. Under the previous administration, EV consumers and manufacturers alike were incentivized with tax credits, and makers of conventionally powered vehicles were penalized. Those incentives (and penalties) have largely been phased out.
If the EV market has stalled, that doesn’t mean the real estate dedicated to EV battery production is going to waste. Energy storage for utilities and data centers is expected to account for 41% of U.S. battery demand this year, up from 26% in 2024, the Wall Street Journal reported, citing a report from Benchmark Mineral Intelligence.
“There are clear incentives to make grid-scale batteries in the U.S.,” reported the WSJ. “Even though [President] Trump’s signature One Big, Beautiful Bill Act took away tax credits for solar and wind, subsidies remain for energy storage as long as the equipment doesn’t contain too much content from China.”
The rising demand for storage has led to a pivot away from EV battery production. The WSJ cited two deals announced last week as examples of this shift. In one, LG Energy Solution, the battery-making unit of Korean conglomerate LG, reached a $4.3-billion agreement with Tesla to produce battery cells for its energy-storage business out of a Lansing, MI factory formerly intended for General Motors’ EV batteries. GM sold its joint-venture stake in the Lansing facility to LG in late 2024.
Elsewhere in the Midwest, Samsung SDI just announced a $1-billion deal with an undisclosed U.S. company to supply prismatic batteries for energy storage out of its StarPlus Energy facility in Kokomo, IN. The factory is a JV of Samsung SDI and Stellantis. “The facility was originally built to manufacture EV batteries but has partially converted production lines for ESS [energy storage systems] in response to changing market demand,” reported Seoul Economic Daily.
The other Big Three U.S. automaker is taking an in-house approach. Ford Motor Company said in late December that it would retotol its BlueOval SK Battery Park plant in Glendale, KY from EV batteries to lithium-iron phosphate batteries for energy storage use. The company plans to spend $2 billion between 2026 and 2027 on the switch, with the new initiative formally titled Ford Energy.
“Ford Energy allows us to maximize the value of our battery manufacturing capabilities,” said president Lisa Drake upon her appointment to the newly created role in January. “We’re building a business focused first on utility-scale battery energy storage systems for large customers while also offering battery cells for residential energy storage solutions.”
Pivoting to ESS battery production doesn’t necessarily mean phasing out EV battery production. Although Japan-based AESC recently retooled its Smyrna, TN gigafactory from its longtime purpose of making EV batteries for the Nissan Leaf, it also plans to roll out EV battery production for BMW in Florence, SC over the course of 2026.
So the onshoring of large-scale battery production continues. Now it’s just a question of what purpose the batteries are intended to serve.