Honda Shifts to Data Center Battery Production
Original: Even Honda is pivoting to data centers
Why This Matters
Automakers redirecting EV battery capacity to energy storage reflects market shift toward grid infrastructure over automotive production.
Honda began production of batteries for energy storage systems this week, redirecting output from a joint venture factory with LG Energy Solution away from electric vehicles toward data centers and grid stabilization.
Honda this week commenced production of batteries for energy storage systems at its Ohio facility, operated jointly with LG Energy Solution, according to Nikkei Asia. The shift marks the automaker's pivot into the high-growth energy storage market following its cancellation of three U.S. EV programs announced three months earlier. The factory originally designated for EV battery production now produces cells for stationary energy storage instead. The strategic change reflects softening U.S. EV demand after the U.S. government eliminated tax credits intended to boost EV adoption. New EV sales remain below year-over-year levels, partly because consumers accelerated purchases to capture expiring tax incentives. In response, Honda wrote down $15.7 billion last fiscal year to restructure its EV strategy, while maintaining its LG Energy Solution joint venture. The stationary battery storage market has grown 32 percent year-over-year, with 9.7 gigawatt-hours installed in Q1 2026—equivalent to powering approximately 120,000 EVs. Industry projections estimate annual installations will reach 110 gigawatt-hours by decade's end, nearly tripling current market size. Tesla dominates the sector with approximately 30 percent gross profit margins on Megapacks and Powerwalls, roughly double vehicle margins. Battery installations support data centers and grid stabilization while improving renewable energy predictability as costs continue declining.