As Ford moves away from producing large electric vehicles, the company is introducing a fresh product line to utilize its batteries.

On Monday, Ford announced that rather than abandoning plans to manufacture batteries for those vehicles, it will redirect that production capacity towards a new battery storage venture. These storage solutions, which will employ more affordable lithium iron phosphate batteries, will serve to power data centers and alleviate demand on the electric grid. 

Ford anticipates that the battery storage systems will commence shipping in 2027 and aims to establish 20GWh of annual output. 

The company plans to invest around $2 billion into this new initiative over the next two years. According to the strategy, Ford will modify the existing manufacturing capability at its Kentucky facility. The automaker intends to produce LFP batteries using technology licensed from China’s CATL, along with battery energy storage system modules and 20-foot DC container setups at this site.

Ford will align itself with several automakers already active or planning to enter the battery storage market. Tesla has spent the previous decade marketing battery storage solutions and deploys about 10GWh each quarter. General Motors also provides a range of home and commercial battery storage options.

Lisa Drake, Ford’s vice president of technology platform programs and EV systems, stated that the “predominant” market opportunity for this new venture will be commercial grid customers. However, data centers will be a secondary focus, with plans to eventually offer home storage products, according to Drake.

“It became apparent when we surveyed the market that most of these customers preferred an LFP prismatic type of container system,” Drake remarked during a press call. “And considering that we already possessed a license to manufacture that technology in the U.S., along with our extensive experience in large-scale manufacturing over a century, it was a natural fit for us.”

Ford’s BlueOval Battery Park Michigan in Marshall, scheduled to start LFP battery production in 2026, remains on schedule, according to the company. These LFP batteries, which will also utilize CATL technology, will be integrated into Ford’s forthcoming mid-sized electric truck. There will be one modification at the Michigan facility, as Ford indicated it will also manufacture smaller Amp-hour cells for “residential energy storage solutions,” hinting that Ford’s strategy will extend beyond just commercial clients.

The BlueOval Battery Park Michigan has undergone various transformations in its short lifespan. In February 2023, Ford announced a $3.5 billion investment to construct the factory intended for LFP batteries to support its expanding electric vehicle lineup. However, construction was abruptly paused in September 2023. Two months later, a revised plan was revealed, targeting a production capacity of 20 gigawatt-hours, roughly 43% less than initially proposed.