Automakers from Tesla to Geely are quietly reconfiguring their businesses: as electric-vehicle sales slow and margins compress, the industry is channeling capital and battery expertise into energy storage and grid services. What began as a way to monetize excess cell capacity has become a broad strategic push — from carmakers converting EV battery lines to manufacturers building utility-scale storage, to OEMs aggregating vehicle batteries into virtual power plants.
This shift is visible in a string of recent moves. NIO opened a joint “solar, storage, charging and battery swap” facility in Jiaxing with Longi; Volkswagen’s Elli subsidiary launched a large storage installation at Salzgitter that can back up 20,000 homes and trade on Europe’s power markets; Geely formed a wholly owned battery unit in Baoji to service storage markets; and Japan’s GS Yuasa announced a 2 GWh storage-cell plant near Tokyo with Toyota among its shareholders.
The calculus behind these choices is straightforward and data-driven. BloombergNEF estimates 2025 saw about 92 GW / 247 GWh of new battery storage capacity, up 23 percent on 2024, with around 85 percent of that grid-connected — a signal that storage is moving from optional to essential. China and the United States led the build-out, and BNEF expects the momentum to accelerate into 2026 and beyond, with multi-decade compound growth projected through 2035.
A second macro driver is surging electricity demand from AI and cloud computing. The International Energy Agency expects global data-center power consumption to top 1,000 TWh by 2026, more than double 2022 levels. AI workloads are bursty and latency-sensitive, making high-performance battery-energy-storage systems (BESS) attractive as both a reliability and a power-quality solution.
Automakers enjoy a practical advantage. EV battery cell manufacturing shares much of the same process and equipment as stationary storage cells, particularly with the industry tilt toward lithium iron phosphate chemistry. That makes line conversions and product adaptations relatively low-cost and fast compared with building entirely new factories. Tesla’s early foray with Powerwall and Powerpack presaged a 2025 energy business that deployed 46.7 GWh of storage and posted gross margins roughly double its automotive division.
Beyond new-build hardware, carmakers can monetize batteries across the asset lifecycle. Strategies include selling home and commercial storage (Powerwall, BYD’s Battery-Box), aggregating millions of distributed assets into virtual power plants and energy-trading platforms (Tesla’s Autobidder; Volkswagen’s Elli), operating battery-swap hubs as dispatchable storage (NIO), and repurposing retired EV modules for factory, dealer or grid-side applications (BMW, Renault, Mercedes-Benz, GM).
The economics are attractive: storage delivers higher gross margins than vehicles in several cases, and the combination of hardware sales plus software-driven arbitrage and service fees creates recurring revenue streams. But the opportunity is not risk-free. Battery degradation from vehicle-to-grid (V2G) cycling raises resale-value concerns for owners; aggregators face questions of “determinacy” because fleets of privately owned vehicles are inherently stochastic; and market rules or price volatility can quickly compress arbitrage opportunities that underpin many business models.
Regulatory frameworks will determine winners. China has moved decisively to integrate storage and virtual-plant actors into organized markets with recent provincial and national policy steps that aim to create a unified power market by 2030. The United States relies more on market incentives and high per-event compensations, such as California’s emergency load-reduction payments and utility programs that pay residential batteries for grid services. Where policy and market design reward flexibility and capacity value, carmakers can scale quickly; where rules are nascent or unstable, the economics are harder to secure.
The industry structure also matters. Global storage shipments surged in 2025 and market concentration is already significant: the top ten suppliers account for a large share of shipments, underscoring a “winner-take-most” dynamic. Automakers that rely solely on EV battery know-how without either scale in cell chemistry/costs or deep capabilities in grid integration face a tough competitive environment against incumbent battery giants and seasoned power-system integrators.
Ultimately, the shift from selling cars to selling electricity marks a strategic redefinition of value in the mobility industry. Batteries are no longer merely propulsion components; they are tradable, software-managed energy assets that can be stacked into multiple revenue layers. For firms that can combine manufacturing scale, grid know-how and attractive customer propositions, storage offers a path to higher-margin, recurring earnings. For those that cannot, the pivot risks being an expensive detour.
The near-term contest will be decided by policy clarity, platform economics and who captures the end customer’s trust. Governments that broaden market access and stabilize price signals will accelerate industrial players’ capacity to invest. Companies that develop seamless user guarantees around battery wear, transparent revenue-sharing with owners, and reliable grid-grade aggregation software will win the trust required to mobilize distributed assets at scale.
What used to be a hardware race is becoming a systems and services race. The carmakers that move fastest to integrate cells, software, markets and afterlife recycling into a cohesive energy business will not simply survive the EV era’s next chapter — they will help define how grids are balanced, data centers powered and households made resilient in a more electrified world.