EVs haven't been going too well for Ford, so it's chasing the AI boom instead.
The Detroit auto giant announced Monday that it is exiting electric vehicles in a move that will cost the company $19.5 billion.
In addition to eliminating planned electric vehicle models and building more hybrid vehicles, Ford announced it will repurpose its EV battery factory in Kentucky to make batteries to power data centers and energy infrastructure.
The Mustang maker added that it will invest $2 billion to expand its new energy storage business, “leveraging electric vehicle battery capacity that is currently underutilized.” By the end of 2027, Ford plans to have installed at least 20 gigawatt-hours of energy storage systems, roughly the amount of electricity used by 2,000 U.S. homes in one year.
This comes as the race to build more powerful AI models fuels a data center boom across the United States and puts pressure on the power grid.
According to federal estimates, data center power demand is expected to triple over the next three years as major technology companies like Meta, Microsoft, and OpenAI pour tens of billions of dollars into AI infrastructure.
EVs, on the other hand, are moving in a different direction. Demand has plummeted in recent months as buyers rushed to buy electric vehicles before a $7,500 federal tax credit expires in September, prompting automakers to scale back investments for the EV winter and bet on hybrids.
Ford said the Glendale, Kentucky, plant it built as part of a joint venture with South Korean battery company SK On will produce commercial batteries for the data center industry. Another battery factory in Michigan will produce smaller units for residential use, Ford added.
The role of Tesla's battery
Ford is following in the footsteps of rival Tesla, which operates a booming energy storage business. Elon Musk's automaker made more than $10 billion last year selling batteries that support the power grid and power people's homes.
Tesla's MegaPack commercial batteries are being used by Musk's startup xAI on the Colossus supercomputer in Memphis, Tennessee. In May, the AI startup reportedly installed 168 Megapacks to stabilize the power supply at the site, one of the world's largest data centers.
Ford is betting on energy storage as it overhauls its broader EV strategy.
The Blue Oval announced Monday that it is canceling plans to build some heavy-duty electric vehicles and converting its F-150 Lightning electric pickup truck to a “long-range” EV with an additional gas generator.
Ford CEO Jim Farley told Bloomberg on Monday that the move was the result of a shrinking U.S. EV market and “customers changing their decisions.”
“The U.S. EV market has grown from 12% of the industry to just five companies, and that ultimately was a big deciding factor for us,” he said.
