Honda starts making batteries for data centres at a factory built for EVs it cancelled

TL;DR

Honda has begun making energy storage batteries at its Ohio plant, pivoting from the cancelled EV programme that triggered a $16 billion write-down.

Honda has begun producing batteries for energy storage systems at its Ohio factory, according to a report from Nikkei Asia. The plant was originally built to supply cells for electric vehicles the company cancelled three months ago. Those batteries are now headed to data centres instead of driveways.

The shift follows Honda’s decision in March to scrap three EVs destined for the American market, a retreat that triggered up to sixteen billion dollars in write-downs and the company’s first annual loss as a listed company. Honda operates the Ohio factory under a joint venture with LG Energy Solution, though Honda bought out LG’s stake in the plant building for nearly three billion dollars late last year.

The pivot comes as demand for EVs in the United States remains weak. The federal tax credit for new electric vehicles expired last September after Congress eliminated it, and sales have fallen year over year as consumers who pulled forward purchases to capture the credit have left a gap in demand.

Honda is not the first automaker to redirect battery capacity toward stationary storage. Ford launched a two-billion-dollar subsidiary called Ford Energy in May to build grid-scale storage systems at a repurposed Kentucky plant, and General Motors announced three energy storage partnerships this month, including a sodium-ion battery development deal with Peak Energy. Tesla, which pioneered the market with its Megapack, earns roughly thirty percent gross margins on energy storage, about twice what it makes selling cars.

The market they are chasing is growing fast. US installations of stationary battery storage hit a first-quarter record of nearly ten gigawatt-hours in the first three months of 2026, a 32 percent increase year over year, according to SEIA and Benchmark Minerals. That is enough battery capacity to build roughly 120,000 electric vehicles.

The growth is expected to accelerate. SEIA projects that annual installations will reach 110 gigawatt-hours by the end of the decade, nearly tripling today’s pace. Much of that demand is being driven by data centres, but a large share also comes from grid operators using batteries to stabilise power supplies and complement wind and solar installations.

For Honda, the strategic logic is straightforward: the company spent billions building battery manufacturing capacity for an EV programme it no longer has, and stationary storage offers a way to keep those production lines running while the American EV market sorts itself out. Whether Honda can compete in a market where Tesla, Ford, and GM already have a head start is another question entirely.

Published July 1, 2026 - 6:35 pm UTC

Back to top