Financial and Business News

Ford Pulls Back from EV Race, Bets Big on Data Center Energy Storage

Wednesday, 17/12/2025 | 07:59 GMT by Louis Parks
  • Ford is scaling back its EV ambitions, canceling large electric models.
  • The automaker plans to convert EV battery plants into energy-storage manufacturing hubs.
  • Hybrid and extended-range powertrains will now complement smaller, lower-cost EVs.
Ford AI artificial intelligence EV electric vehicles
Ford will focus on smaller EVs, such as the Puma Gen-E, and hybrids (Ford).

Ford retreats from large EVs toward hybrids and energy-storage systems for AI data centers and infrastructure in a major strategic overhaul.

The EV Retreat Begins

Ford has signaled a dramatic shift in its electrification strategy, stepping away from big, fully electric vehicles (EVs) that have struggled to find buyers. Though once positioned as a challenger to Tesla and the vanguard of the electric pickup revolution, Ford is pivoting hard. The company will take a $19.5 billion hit as it scales back its EV investments, canceling several planned electric models and rethinking its approach to electrified mobility.

A centerpiece of this retreat is the decision to discontinue big battery-electric vehicles such as the F-150 Lightning in their current form and other large EV plans that have failed to meet sales expectations or financial viability.

Ford AI artificial intelligence EVs EV Electric Vehicle
Jim Farley, CEO at Ford Motor Company (LinkedIn).

Ford CEO Jim Farley and other executives have framed this as a customer-driven shift, noting that demand for large EVs has collapsed while interest in hybrids and extended-range options has grown. Farley said on Monday that the decision reflected a sharp contraction in the US EV market and a shift in buyer behavior. “The EV market in the US went from 12% of the industry to only five, and that really, in the end, was the big decider for us,” he said.

Repurposing Battery Factories for AI-Related Energy Storage

Here’s where things get interesting. Instead of letting idle EV battery capacity go to waste, Ford is repurposing key battery plants to build energy-storage systems aimed at supporting artificial intelligence (AI)-related data centers and the electrical grid.

The company’s Glendale, Kentucky battery facility originally dedicated to electric vehicle production will be transformed into a hub for large-scale battery energy storage systems (BESS) that can serve commercial AI data centers and infrastructure customers. Ford plans to deploy at least 20 gigawatt-hours of storage capacity by the end of 2027, leveraging existing industrial expertise and underutilized battery manufacturing capacity.

This move positions Ford to tap into a demand wave driven by rapid growth in AI and cloud computing. As data centers proliferate and energy needs surge due to the surge in the use of AI, operators are increasingly adopting battery storage to cut costs, improve reliability, and buffer electricity demand spikes.

There’s also a nod to residential applications: Ford will use other facilities to make smaller energy-storage units for homes, rounding out a broader portfolio of storage solutions.

A New Powertrain Mix: Hybrids, EREVs, and Affordable EVs

Ford’s retreat from heavy EV bets does not equate to abandoning electrification entirely. Rather, it’s being pitched as a strategic realignment toward electrified vehicles that make more financial sense for both the company and typical buyers.

Under the updated plan, Ford will focus on a diverse array of powertrains:

  • Hybrids: Vehicles combining internal combustion engines with electric motors to improve fuel economy and lower costs.
  • Extended-range EVs (EREVs): Electric vehicles with onboard generators (often gasoline engines) that recharge batteries on the go, reducing range anxiety.
  • Smaller, affordable BEVs: New EVs built on Ford’s Universal EV Platform aimed at price-sensitive segments, including a midsize electric truck for 2027.

By 2030, Ford expects roughly 50 percent of its global sales mix to consist of hybrids, EREVs, and fully electric vehicles, compared with just 17 percent today.

Why This Matters

Market Reality Check

Ford’s pivot reflects a broader reality: sales of large, expensive EVs have softened significantly as US federal incentives expire, material costs remain high, and consumer preferences shift toward more flexible options.

By scaling back and taking a substantial hit where necessary, Ford is acknowledging that the EV market’s early hype hasn’t aligned with the economic reality of mainstream buyers. Hybrids and EREVs, while perhaps less headline-grabbing, appeal to customers who want better fuel economy without the compromises or cost premiums of large BEVs.

AI Data Centers and Energy Infrastructure: A New Frontier

Ford’s bold energy-storage play could turn out to be one of the most consequential aspects of this strategy. Demand for batteries to support data centers, utilities, and grid stabilization is surging thanks to AI growth, electrification of industry, and renewable integration. Ford’s decision to lean into this market uses its battery expertise in a way that might deliver higher returns than competing in an oversupplied EV segment.

That puts the company in direct competition with established energy-storage players and even Tesla, which has built a multi-billion-dollar storage business from Megapacks and related products.

Legacy Meets Reinvention

There’s a broader narrative here, too. Ford, a company that helped usher in mass-market automobiles more than a century ago, is now reinventing parts of its business to address the energy needs of tomorrow. Whether this bet on energy storage pays off remains to be seen, but it’s a far cry from the all-in EV strategy of just a few years ago.

Looking Ahead

Ford’s strategic pivot underscores the unpredictable nature of the auto industry’s electrification journey. With underperforming EV models being shelved, hybrids gaining traction, and new energy-storage ambitions taking shape, the company is charting a course that blends legacy strength with forward-looking growth sectors.

If Ford can capitalize on the booming data center and grid storage markets while maintaining relevance in electrified vehicles that align with consumer demand, it may emerge as a far more balanced industrial powerhouse, even if it forsakes the pure EV crown it once chased.

Ford retreats from large EVs toward hybrids and energy-storage systems for AI data centers and infrastructure in a major strategic overhaul.

The EV Retreat Begins

Ford has signaled a dramatic shift in its electrification strategy, stepping away from big, fully electric vehicles (EVs) that have struggled to find buyers. Though once positioned as a challenger to Tesla and the vanguard of the electric pickup revolution, Ford is pivoting hard. The company will take a $19.5 billion hit as it scales back its EV investments, canceling several planned electric models and rethinking its approach to electrified mobility.

A centerpiece of this retreat is the decision to discontinue big battery-electric vehicles such as the F-150 Lightning in their current form and other large EV plans that have failed to meet sales expectations or financial viability.

Ford AI artificial intelligence EVs EV Electric Vehicle
Jim Farley, CEO at Ford Motor Company (LinkedIn).

Ford CEO Jim Farley and other executives have framed this as a customer-driven shift, noting that demand for large EVs has collapsed while interest in hybrids and extended-range options has grown. Farley said on Monday that the decision reflected a sharp contraction in the US EV market and a shift in buyer behavior. “The EV market in the US went from 12% of the industry to only five, and that really, in the end, was the big decider for us,” he said.

Repurposing Battery Factories for AI-Related Energy Storage

Here’s where things get interesting. Instead of letting idle EV battery capacity go to waste, Ford is repurposing key battery plants to build energy-storage systems aimed at supporting artificial intelligence (AI)-related data centers and the electrical grid.

The company’s Glendale, Kentucky battery facility originally dedicated to electric vehicle production will be transformed into a hub for large-scale battery energy storage systems (BESS) that can serve commercial AI data centers and infrastructure customers. Ford plans to deploy at least 20 gigawatt-hours of storage capacity by the end of 2027, leveraging existing industrial expertise and underutilized battery manufacturing capacity.

This move positions Ford to tap into a demand wave driven by rapid growth in AI and cloud computing. As data centers proliferate and energy needs surge due to the surge in the use of AI, operators are increasingly adopting battery storage to cut costs, improve reliability, and buffer electricity demand spikes.

There’s also a nod to residential applications: Ford will use other facilities to make smaller energy-storage units for homes, rounding out a broader portfolio of storage solutions.

A New Powertrain Mix: Hybrids, EREVs, and Affordable EVs

Ford’s retreat from heavy EV bets does not equate to abandoning electrification entirely. Rather, it’s being pitched as a strategic realignment toward electrified vehicles that make more financial sense for both the company and typical buyers.

Under the updated plan, Ford will focus on a diverse array of powertrains:

  • Hybrids: Vehicles combining internal combustion engines with electric motors to improve fuel economy and lower costs.
  • Extended-range EVs (EREVs): Electric vehicles with onboard generators (often gasoline engines) that recharge batteries on the go, reducing range anxiety.
  • Smaller, affordable BEVs: New EVs built on Ford’s Universal EV Platform aimed at price-sensitive segments, including a midsize electric truck for 2027.

By 2030, Ford expects roughly 50 percent of its global sales mix to consist of hybrids, EREVs, and fully electric vehicles, compared with just 17 percent today.

Why This Matters

Market Reality Check

Ford’s pivot reflects a broader reality: sales of large, expensive EVs have softened significantly as US federal incentives expire, material costs remain high, and consumer preferences shift toward more flexible options.

By scaling back and taking a substantial hit where necessary, Ford is acknowledging that the EV market’s early hype hasn’t aligned with the economic reality of mainstream buyers. Hybrids and EREVs, while perhaps less headline-grabbing, appeal to customers who want better fuel economy without the compromises or cost premiums of large BEVs.

AI Data Centers and Energy Infrastructure: A New Frontier

Ford’s bold energy-storage play could turn out to be one of the most consequential aspects of this strategy. Demand for batteries to support data centers, utilities, and grid stabilization is surging thanks to AI growth, electrification of industry, and renewable integration. Ford’s decision to lean into this market uses its battery expertise in a way that might deliver higher returns than competing in an oversupplied EV segment.

That puts the company in direct competition with established energy-storage players and even Tesla, which has built a multi-billion-dollar storage business from Megapacks and related products.

Legacy Meets Reinvention

There’s a broader narrative here, too. Ford, a company that helped usher in mass-market automobiles more than a century ago, is now reinventing parts of its business to address the energy needs of tomorrow. Whether this bet on energy storage pays off remains to be seen, but it’s a far cry from the all-in EV strategy of just a few years ago.

Looking Ahead

Ford’s strategic pivot underscores the unpredictable nature of the auto industry’s electrification journey. With underperforming EV models being shelved, hybrids gaining traction, and new energy-storage ambitions taking shape, the company is charting a course that blends legacy strength with forward-looking growth sectors.

If Ford can capitalize on the booming data center and grid storage markets while maintaining relevance in electrified vehicles that align with consumer demand, it may emerge as a far more balanced industrial powerhouse, even if it forsakes the pure EV crown it once chased.

Topics
electric vehicles
AI
artificial intelligence
data centres
About the Author: Louis Parks
Louis Parks
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Louis Parks has lived and worked in and around the Middle East for much of his professional career. He writes about the meeting of the tech and finance worlds.

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