General Motors and Ford Motor are intensifying their century-old rivalry by expanding into U.S. defense contracts and energy storage systems. Facing slowing domestic vehicle sales and billions in electric vehicle losses, both automakers are repurposing manufacturing capacity to capture new revenue streams in military hardware and the expanding data center power market.
The Bottom Line
- Strategic Pivot: General Motors (NYSE: GM) and Ford Motor (NYSE: F) are targeting the defense and energy storage markets to offset decelerating domestic automotive sales and billions lost on electric vehicle development.
- Financial Projections: GM anticipates its defense revenue will climb to nearly $700 million in 2026, while Ford has guided for $4 billion in losses in its Model e segment for 2026 before targeting breakeven by 2029.
- Infrastructure Conversion: Ford plans to invest $2 billion into its energy business, converting a Kentucky battery facility built with partner SK On into an energy storage system (ESS) production hub by late 2027.
Diversifying Beyond the Showroom Floor
For more than 100 years, General Motors (NYSE: GM) and Ford Motor (NYSE: F) competed almost exclusively across consumer retail, commercial fleets, and motorsport circuits. But as traditional automotive margins face headwinds, these Detroit stalwarts are moving into high-stakes industrial alternatives. According to Morningstar senior equity analyst David Whiston, entering the defense and energy sectors offers a pragmatic solution for excess capacity.
“They’re looking for new verticals,” Whiston noted in commentary provided to 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.”
This strategic realignment follows a painful capital expenditure cycle. Both corporations poured billions of dollars into dedicated battery and EV assembly plants designed to meet consumer demand projections that ultimately failed to materialize. Rather than writing off idle real estate, management teams are pivoting those footprints toward grid-scale energy storage and military applications.
Capturing the Energy Storage Boom
The global energy storage system (ESS) market is projected to expand from $668.7 billion in 2024 to $5.12 trillion by 2034, according to research from Global Market Insights. This exponential expansion is driven largely by surging electricity demands from artificial intelligence data centers and rising consumer energy costs. Because ESS architecture shares core chemistry and manufacturing methodologies with EV batteries, automotive incumbents possess a distinct supply chain advantage.
General Motors is tackling the energy space through multiple channels. While its core energy business does not currently sell a proprietary branded ESS, its Ultium Cells joint venture in Tennessee produces cells supplied to LG Energy Solution for storage applications. Furthermore, GM is collaborating with Denver-based startup Peak Energy to engineer next-generation sodium-ion batteries designed to transform grid-scale energy storage. Kurt Kelty, GM vice president of battery and sustainability, emphasized the commercial viability of this pivot. “The ESS market is a very attractive market,” Kelty stated. “It’s a big market. It’s growing very quickly, and it’s something that we can contribute to.” Additionally, GM maintains a partnership with Redwood Materials to recycle depleted EV battery packs into secondary-life energy storage units.
Meanwhile, Ford announced a $2 billion allocation to launch its dedicated energy enterprise. The plan involves converting a newly constructed battery plant in Kentucky—originally developed alongside partner SK On—into an ESS manufacturing facility scheduled to come online by late 2027. Ford also intends to utilize floor space at its Marshall, Michigan BlueOval Battery Park site to produce smaller battery units for household energy storage.
According to Morgan Stanley analyst Andrew Percoco, this operational pivot serves as an “underappreciated driver” on the path toward profitability for Ford’s EV division. Ford CEO Jim Farley informed investors during a July earnings call that the company is currently in the “third inning” of selling out its initial 20 gigawatt-hours of ESS production capacity. This milestone follows a five-year framework agreement secured with renewable-energy service provider EDF Power Solutions North America.
Securing Pentagon and Ministry of Defence Contracts
While energy storage addresses commercial and utility grid demands, the U.S. defense sector provides a steady stream of government-backed procurement contracts. General Motors holds a considerable head start in this arena, having resurrected GM Defense in 2017 after a 14-year hiatus.
Army contract to manufacture Infantry Squad Vehicles (ISVs)—engineered on the off-road architecture of the Chevrolet Colorado ZR2 midsize truck—with valuations potentially exceeding $1 billion subject to congressional appropriations. Army Combat Capabilities Development Command Ground Vehicle Systems Center, pointed out the systemic advantages of leveraging automotive supply chains. “Leveraging the capabilities, the scalability and the manufacturing abilities that come with all of the automotive companies and their tiered supplier is a huge benefit,” Grein noted.
GM expects its defense division revenue to scale toward $700 million, while targeting positive earnings before interest and taxes (EBIT) within the current fiscal year. GM CEO Mary Barra highlighted broader industrial partnerships during a July investor briefing, stating, “We are also working with Lockheed Martin and other leading companies to expand speed, scale and resilience in the defense industrial base.”
Ford, meanwhile, has accelerated its own military contracting efforts following outreach from the federal administration regarding domestic mass manufacturing expertise. The company announced a strategic partnership with General Dynamics Land Systems and engineering firm Ricardo to bid on a next-generation vehicle prototype for the United Kingdom’s Ministry of Defence Light Mobility Vehicle program. Highlighting the commercial alignment behind these defense initiatives, Ford CEO Jim Farley remarked to investors, “We already dominate in that market in the commercial world. We want to offer the U.S. government the same advantages that our commercial customers get.”
Comparative Matrix of Detroit’s Industrial Diversification
| Metric / Strategic Focus | General Motors (NYSE: GM) | Ford Motor (NYSE: F) |
|---|---|---|
| Defense Sector Status | Active contractor; ISV contract exceeding $1B potential; targeted defense revenue near $700M. | Entering sector; teaming with General Dynamics and Ricardo for U.K. military vehicle bids. |
| Energy Storage Strategy | Collaborating with Peak Energy on sodium-ion cells and Redwood Materials on recycling; residential ESS offerings. | Investing $2B to convert SK On Kentucky plant for ESS production by late 2027; Marshall, Michigan residential battery cells. |
| EV Segment Financial Guidance | Scaling Ultium manufacturing and stabilizing margins through multi-segment supply integration. | Guiding for $4 billion in losses for Model e segment in 2026, targeting breakeven by 2029. |
Market Outlook and Structural Realities
Although these non-automotive segments represent a fraction of total top-line revenue for both companies, the strategic rationale remains sound. As retail automotive demand normalizes and interest rate pressures impact consumer financing, establishing secure, multi-year revenue streams through federal defense procurement and utility-scale energy contracts insulates these industrial giants against cyclical downturns.
The success of these initiatives will depend heavily on execution speed and capital discipline. For General Motors, turning a profit on defense operations while scaling advanced battery chemistry partnerships provides a tangible blueprint. For Ford, converting idled EV manufacturing assets into profitable ESS production lines by late 2027 will dictate whether its Model e division can successfully bridge the gap toward its 2029 breakeven target.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
