Why Tesla and LG Are Betting on the Grid, Not Just EVs

As EV demand slows, battery giants turn to grid storage to power the next energy boom

13 Nov 2025

The US battery industry is accelerating a shift from electric vehicles to large-scale energy storage as companies adjust to slower growth in car sales and rising demand from power providers. The move marks a broader realignment in how manufacturers expect the country’s electricity system to develop.

Producers are redirecting or adding capacity to systems used by utilities to manage fluctuations from solar and wind generation. Once a specialised niche, grid-scale batteries are emerging as a central element of the clean-energy supply chain, with installations expected to reach new highs in 2025.

Tesla has reported strong interest in its container-based storage units, which help balance short-term changes in electricity output. LG Energy Solution is preparing to supply the expanding market through its planned partnership with Tesla, due to begin in August 2027 according to sources. The collaboration signals confidence in long-term US incentives and grid-modernisation plans.

Analysts say the shift reflects both opportunity and competitive pressure. Utilities and fast-growing electricity users, including data-centre operators, are driving new demand for storage. Power providers are seeking resources that can be deployed quickly and adjusted to local needs, making batteries an appealing option.

The policy backdrop has also played a role. Federal and state programmes have encouraged storage investment through tax credits, procurement targets and support for domestic manufacturing. Companies are positioning themselves to benefit from expected increases in renewable generation and the need for more flexible backup capacity.

Obstacles remain. Developers must work through lengthy permitting processes and interconnection queues, while utilities often operate on planning cycles that delay deployment. A rebound in EV purchases could also tighten supply for manufacturers serving both markets.

Industry executives, however, argue that more adaptable production lines will allow them to respond to changes in demand from transport and power sectors. Some groups are exploring modular designs and diversified supply chains to reduce bottlenecks.

Investment across the storage value chain is rising as manufacturers, developers and service providers expand capacity and test new commercial models. The US is also attracting interest from overseas suppliers seeking access to a growing market.

If current trends continue, the sector’s pivot could strengthen the country’s ability to integrate renewable power and support the development of more resilient electricity systems.