Ford and GM Push Into Military Contracts and Energy Storage as EV Losses Mount

General Motors and Ford Motor have competed fiercely for over a century across racing, vehicle sales, and countless automobile-related activities. Their latest rivalry, however, extends far beyond traditional car lots and into military manufacturing and the rapidly expanding energy storage market.

Ford joined GM this year in pursuing U.S. military contracts after the Trump administration approached American companies about lending their mass manufacturing expertise to defense efforts. The automakers’ military work currently focuses on military vehicles, but industry watchers expect the scope to expand over time as both companies establish their defense credentials.

Simultaneously, both Detroit giants are entering the energy storage system (ESS) market amid surging demand driven by rising consumer energy costs and the explosive growth of data centers. Energy storage systems leverage much of the same underlying technology as electric vehicle batteries, storing power for homes, businesses, and utilities, creating a natural adjacency for automakers already invested in battery technology.

Diversification After Costly EV Setbacks

Wall Street analysts view both markets as potential new growth verticals for the struggling automakers. The strategic pivot comes after Ford and GM collectively lost billions of dollars on all-electric vehicle ventures that once promised to be their next major revenue drivers but instead became costly drains on capital.

“They’re looking for new verticals,” Morningstar senior equity analyst David Whiston told CNBC. “Ford’s following GM’s lead into defense, and energy makes a lot of sense because you have all this EV capacity that now you don’t need. So instead of selling those factories, it’s a way to try and capitalize on the data center boom.”

The two markets represent relatively small portions of the companies’ focus and revenue for the foreseeable future, but they offer opportunities to diversify operations and complement core businesses as new vehicle sales slow across the United States. The moves reflect a pragmatic acknowledgment that automotive manufacturing alone may not sustain growth trajectories investors demand.

Massive Energy Storage Growth Projected

The global ESS market stands poised for explosive expansion, with research and consulting firm Global Market Insights estimating growth from $668.7 billion in 2024 to $5.12 trillion by 2034. The firm expects to see particularly significant expansion within the United States as power demands escalate.

“We’re seeing this huge projection of growth, and it’s already started growing,” Devon Wilson, vice president of sales and marketing at LG Energy Solution’s U.S. energy storage division, said during a recent event. “There’s a massive amount of just fundamental electricity need within the country.”

GM and Ford aim to capitalize on this expected growth by filling infrastructure voids with technology and manufacturing capacity they’ve already developed for electric vehicles. The battery expertise accumulated during their costly EV push now finds new commercial applications in stationary storage, potentially salvaging investments that initially appeared to be dead ends.

Realistic Expectations for Revenue Impact

Industry analysts caution that neither defense contracts nor energy storage will immediately transform the automakers’ financial pictures, given the massive scale of traditional automotive operations. The businesses will likely remain supplementary rather than transformational in the near term, contributing incrementally rather than revolutionizing revenue models.

“It’ll be hard to move the needle here massively, given the auto business’s top line, but it certainly can be helpful,” Whiston said, capturing the measured optimism surrounding these diversification efforts.

The automakers already face mounting cost pressures from other directions, with tariffs on Canadian-made cars hitting both Ford and GM particularly hard. The U.S. imposed tariffs on $20 billion of Canadian goods, including cars manufactured by both companies north of the border, effective January 1, 2027, creating additional headwinds as they attempt to stabilize operations.

Leveraging Existing Manufacturing Strengths

The military contracts represent a natural extension of capabilities both automakers have honed over decades. Mass manufacturing requires sophisticated logistics, quality control systems, supply chain management, and production engineering-all areas where Ford and GM maintain deep expertise despite recent financial struggles in the EV sector.

By pivoting underutilized EV production capacity toward energy storage systems, the companies avoid the painful process of shuttering facilities or selling factories at losses. Instead, they redeploy capital assets toward markets demonstrating actual demand rather than hypothetical future adoption curves that failed to materialize as quickly as projected.

The dual push into defense and energy storage illustrates how traditional industrial companies adapt when faced with market realities that diverge sharply from strategic plans. Rather than doubling down on money-losing EV operations, Ford and GM demonstrate strategic flexibility by identifying adjacent markets where their core competencies translate more profitably, at least in the medium term as they reassess long-term automotive electrification strategies.