Why Car Companies Are Now Getting Into the Energy Business

General Motors and Ford are moving beyond building cars. They're now building systems that manage electricity for homes, businesses, and power grids—taking advantage of the batteries and expertise they've developed for electric vehicles.

GM launched an Energy business unit in October 2022 with products called Ultium Home and Ultium Commercial. The company explained that these systems can charge electric vehicles in both directions (sending power back to your home or the grid), work with solar panels, and help manage how electricity flows through neighborhoods and buildings.

Ford is taking a similar path. In 2023, the company announced it would convert a manufacturing plant in Glendale, Kentucky from building electric vehicles to producing batteries for grid storage—the kind of large, stationary batteries that help power companies manage electricity demand across cities.

Cheaper Batteries Make the Business Case Work

For car companies to make money in the energy business, they need to make batteries cheaper. GM invested in a company called Mitra Chem in August 2023 to develop new types of battery materials. Specifically, they're working on batteries that use iron instead of expensive cobalt and nickel.

This matters because iron-based batteries cost less, stay stable at high temperatures, and last longer through repeated charges and discharges. For power grids, those qualities matter more than raw speed or capacity. A grid battery that lasts 10 years without degrading is more valuable than one that's slightly faster but wears out quickly.

Ford has been pursuing a different strategy, using batteries to help gasoline engines work more efficiently. In vehicles like the Transit van and Puma, batteries capture energy during braking and use it to help the engine during acceleration. This hybrid approach reduces fuel consumption without requiring a full switch to electric power.

Repurposing Factories for a New Business

Car manufacturers have spent billions building factories and supply chains for batteries. Converting those same factories to make grid-storage batteries instead of car batteries is an efficient use of that investment. It's similar to how a bakery might use its ovens to make both bread and pastries.

Ford's decision to convert the Glendale plant to produce 20 gigawatt-hours of battery storage annually shows that automakers see long-term value in energy markets, not just vehicles.

GM has also invested in domestic battery production, allocating $918 million in January 2023 to U.S. plants for electric vehicle components. At the same time, the company is maintaining plants that build traditional gas engines, keeping flexibility as customer demand shifts between fuel types.

These investments also align with new federal incentives. The U.S. government is offering grants and tax breaks for companies that build batteries domestically and modernize the electrical grid. Automakers entering this market early can capture a share of that opportunity.

Turning Your Car Into a Power Source

GM's energy platform includes technology that lets electric vehicles send power back to the grid when electricity is most needed. Think of your car's battery as a backup generator that can also help stabilize the neighborhood power supply. Vehicle owners could potentially earn money by letting the grid use their car's stored electricity during peak demand times.

For homes, GM's technology can back up power during outages, replacing the traditional backup generator with your parked electric car.

The logic here connects to patterns we've seen before. When telephone companies built networks of cables and switching centers, some of them later used that same infrastructure to offer internet service and data storage. The skills and equipment for managing large, reliable systems in one field often apply to adjacent fields. Automakers have decades of experience managing massive manufacturing networks and complex supply chains. Those same management skills translate to running energy systems.

Extreme weather has been increasing power outages in many parts of the country. Vehicles that can serve as emergency backup power could have real value during those incidents.

Competition Is Growing

By entering the energy market, Ford and GM are competing directly with Tesla, energy companies, and specialized battery manufacturers. Tesla already sells home battery systems called Powerwalls and operates large battery installations for utilities.

For automakers to win in this new space, they'll need more than manufacturing skill. They need to understand how power grids work, meet different regulatory rules, and learn how to service energy systems over decades. Those are different skills than building and selling cars.

The real test is whether Ford and GM can move fast enough. Grid companies, energy software firms, and Tesla itself all have a head start in this market. Automakers have advantages—they can build batteries at scale and reach customers through existing dealer networks—but they're playing catch-up on the energy side of the business.