Major battery manufacturers, including Tesla, LG, and GM, are shifting their focus from electric vehicles (EVs) to large-scale energy storage systems (ESS) as demand for EVs slows. This strategic pivot enables these companies to optimise their existing production facilities, explore new commercial opportunities beyond automotive batteries, and address the growing electricity demands driven by the integration of renewable energy and grid modernisation.
Battery makers pivot as EV demand slows
Global battery companies that were once optimistic about electric vehicles are now shifting their focus to an entirely different market: energy storage systems (ESS) for utilities, renewable power developers, and large data centres powering artificial intelligence.
“ESS was the ugly duckling for a long time within our organisation,” said Jaehong Park, CEO of LG Energy Solution Vertech.
But now, the stationary storage segment has emerged as a crucial growth area amid slowing EV demand due to tariffs, policy uncertainty, and cost factors.
According to MSN, the stagnating demand for EVs has left many billion-dollar electric vehicle battery factories in the US South and Midwest largely idle. As a result, energy storage has emerged as a key alternative market, helping offset the slowdown in EV battery sales. In the US, energy storage installations tripled from 2021 to 2024, with projections from energy consulting firm Wood Mackenzie showing a 34% growth in 2025.
Unlike vehicle batteries, stationary energy storage systems (ESS) are made to support electricity grids by storing extra power from renewable sources. They help balance supply and demand, keeping the grid stable. ESS is crucial to making renewable energy more reliable by mitigating the fluctuations of solar and wind power.
As renewable energy projects grow around the world, especially in Australia, the need for energy storage gives battery makers an important new market as the EV market slows.
Industry leaders shaping the energy storage future
Tesla is the leading EV battery maker driving this trend. By shifting focus to ESS, the company saw its revenue grow by 67% last year, reaching $4 billion, which includes sales from its solar panels market. This growth helped offset a $6 billion drop in EV sales, according to EVXL.
Major customers of Tesla’s Megapack systems include utility providers like Intersect, as well as the related AI company, xAI, which purchased $191 million worth of products in 2024. Tesla’s focus on low-cost lithium-iron-phosphate (LFP) batteries further strengthens its leadership in stationary storage technology and market expansion.
General Motors (GM) is also actively pursuing a pivot to energy storage. The company is exploring a partnership to supply both new and used batteries to Redwood Materials, a startup specialising in the recycling and repurposing of batteries for large-scale energy storage systems. Redwood founder JB Straubel remarked that “right now, there is a hunger for more energy from every source.”
LG is also taking bold steps to diversify its business as the EV market softens. The company co-owns several battery factories with partners, including GM, Honda, and Hyundai, utilising the same low-cost chemistry that has enabled Chinese manufacturers to dominate the industry. Rather than building new capacity, LG has redirected multiple U.S. battery plants that were once dedicated to EV production toward energy storage. It is also expanding its $1.4 billion facility in Holland, Michigan, to produce stationary battery storage systems.
Despite a 24% drop in EV battery sales in 2024, LG’s strategy focuses on maximising the use of existing plants and maintaining supply chain resilience. Customers, such as Excelsior Energy Capital, are already sourcing LG’s US-made batteries for utility-scale solar and storage projects, thereby strengthening domestic supply and mitigating geopolitical risks.
What the pivot means for the future of Australia’s renewables sector
EV sales in Australia are growing, but the pace remains modest, accounting for just over 12% of new vehicle sales in 2025, compared to global leaders, due to challenges such as charging infrastructure and affordability. At the same time, stationary battery energy storage systems (BESS) are becoming just as important. While EVs cut transport emissions, BESS strengthens the grid by storing surplus renewable energy and balancing supply and demand.
Australia’s utility-scale battery capacity is projected to rise from just over 2GW in 2024 to more than 18GW by 2035. In the first quarter of 2025 alone, AUD 2.4 billion was invested in large-scale projects, signalling strong confidence.
With safer and more sustainable technology on the rise, BESS is reshaping the energy landscape. Energy consultants are crucial in helping businesses and communities navigate technical, financial, and regulatory choices to make the most of this opportunity while advancing national clean energy goals.