Taken from Yahoo Finance, written by John Irwin on October 10th, 2025
More than a decade of electric vehicle hype at the annual Battery Show conference here gave way this year to heightened enthusiasm for energy storage systems.
Lower-than-expected U.S. EV demand and rapidly shifting federal policies have caused battery makers and suppliers to back off projections of rapid EV growth. Instead, companies including LG Energy Solution, General Motors and SK On used the Battery Show to tout their abilities to supply batteries for other uses, including energy storage systems for data centers and green energy providers.
“We’re really trying to balance our production capacity to the demands of different markets,” Bob Lee, LG Energy Solution’s North American chief, said during a keynote address at the show. “EVs, while they’re growing, they’re not growing necessarily at the pace we expected when we made the investments several years ago.”
Automakers, suppliers and EV battery makers have poured billions of dollars into North American battery production. They bet that EVs would soon make up a large share of new-vehicle sales, fueled in part by Biden-era consumer and manufacturing subsidies.
But EV sales are well short of what many companies projected when making those investments. And now, many expect the pace of growth to cool further after the $7,500 federal EV incentive ended Sept. 30 under the One Big Beautiful Bill Act.
That’s left companies scrambling to fill capacity at their factories and recover their investments.
Uses for energy storage systems
Energy storage systems are battery sets that hold energy for later use. Solar and wind energy providers have long used these systems to park electrons to ensure energy is available during down times.
But the talk at the Battery Show largely centered on data centers used by tech companies to train artificial intelligence models. Tech giants such as Google, Meta and OpenAI are investing significant resources into building those data centers, which require enormous amounts of energy.
According to Deloitte, power demand from AI data centers in the U.S. is expected to grow to 123 gigawatts in 2035 compared with 4 gigawatts in 2024. That could strain U.S. utilities and has led some companies to invest in energy storage systems to keep power flowing and energy costs down.
“Despite what has maybe been a lackluster year in electric vehicles, the storage market is having a pretty strong year with expected growth of over 50 percent,” said Shan Tomouk, energy research lead at Rho Motion.
That growth is driving battery companies targeting that market as EV sales growth slows.
LG Energy Solution in May began producing lithium iron phosphate batteries for energy storage systems alongside the EV batteries it makes at a plant in western Michigan. LG is helping to power around 115 “large-scale” energy storage sites throughout the U.S., Lee said.
Energy storage systems are “becoming a significant portion of the business,” he said.
Likewise, South Korean battery giant SK On entered the market in September when it signed a deal with Flatiron Energy Development to supply 7.2 gigawatt-hours of energy storage system batteries between 2026 and 2030.
“We see both EVs and energy storage systems as core to the energy transition, and we see both of these markets growing significantly in the mid-term,” said Rob Schnell, SK On’s North America president, during a keynote address.
Automakers are also pivoting. Kurt Kelty, GM’s vice president of battery propulsion and sustainability, noted the automaker’s energy storage partnership with Redwood Energy during an address at the Battery Show. GM supplies Redwood with new and second-life batteries that provide power and storage capacity, including for use at a data center for AI company Crusoe.
“It’s another powerful example about how GM’s battery strategy is scaling beyond transportation and into energy resilience, sustainability and digital infrastructure,” Kelty said.
More partnerships are likely as AI companies, green energy providers and public utilities seek new sources for energy and electricity demand rises, analysts said.
“Second-life batteries are going to be a big piece of building grid stability,” said Stephanie Valdez-Streaty, strategic planning director at Cox Automotive.
Electric vehicles are still in the mix
To be sure, companies are still committed to EV battery production. The U.S. market for EVs is expected to grow despite the end of federal incentives, in part because batteries are becoming cheaper and more efficient.
Many companies at the Battery Show said they now expect EV sales to account for around 20 percent of U.S. new-vehicle sales by the end of the decade. That’s far less than the 40 or 50 percent projections in previous years but still up significantly from about 8 percent in 2024.
And despite the reduced hype around passenger EVs, companies see growing potential in electric light commercial vehicles, said Austin Stephen, a manager at Boston Consulting Group. Ford, for example, is using battery cells developed for the Mustang Mach-E crossover to power its Transit vans.
“We’re seeing a lot of OEM success with the integration of passenger vehicle technology into light commercial vehicles,” Stephen said.
Despite the challenges in the EV market, executives and industry analysts at the show expressed confidence in the battery sector’s resilience.
“Batteries are still being developed, whether it’s for [energy storage systems], vehicle usage, R&D or consumer products,” said Danielle Spalding, senior vice president of communications and government affairs at Cirba Solutions. “We still have this need to fulfill.”