Honda this week began production of batteries destined not for cars, but for data center energy storage systems — marking the latest and perhaps most symbolic pivot yet from the traditional auto industry toward the AI-powered future.
The move comes three months after Honda canceled its U.S. EV programs, including three models slated for the American market. Batteries originally intended for those EVs — to be built at a joint venture factory in Ohio with LG Energy Solution — are now headed to server racks instead of driveways.
The pivot reflects a harsh new reality for automakers. U.S. EV demand remains soft following the cancellation of federal tax credits last September, and consumers had pulled forward their purchases to take advantage of the incentives before they vanished. Honda wrote down $15.7 billion last fiscal year, partly to restructure its failed EV strategy.
But while EVs stumbled, the stationary storage market exploded — growing 32% year-over-year. In Q1 2026 alone, 9.7 gigawatt-hours of energy storage were installed in the U.S., enough batteries to power roughly 120,000 EVs. By the end of the decade, analysts expect 110 GWh installed annually.
Tesla has shown how profitable this market can be, earning 30% gross margins on its Megapack and Powerwall products — roughly double its margins on vehicles.
Honda joins a growing list of automakers — including Tesla, Ford, and GM — that have discovered batteries are a lucrative business even without cars attached. Most stationary storage today serves data centers or grid stabilization, with AI's insatiable energy appetite driving unprecedented demand.
It's a sign of the times: even after canceling its American EV dreams, Honda kept its battery joint venture alive. There was simply too much money to be made elsewhere.
