How the Shift From EVs to Data Centers Is Reshaping the Battery Market

The battery market is experiencing a dramatic shift – and it’s creating opportunities for energy storage professionals.

HeatSpring instructor Wes Kennedy breaks down the technology trends reshaping the industry: how EV manufacturing overcapacity is driving battery prices down, why Ford is pivoting from electric trucks to stationary storage, and how direct-to-consumer brands are solving residential storage better than legacy solar companies.

He also discusses the hype around sodium-ion batteries and why LFP will likely dominate for the next five years despite the buzz. It’s a deeper conversation than our usual clips – worth the time if you’re trying to understand where battery technology is headed.

This clip comes from a HeatSpring PRO Circle – small group focused discussions where PRO members learn directly from industry experts. HeatSpring PRO includes Wes’s Comprehensive Solar Plus Storage course plus 15 others in energy storage, solar service, building systems, and skilled sales for $89/month or $890/year. It’s in-depth training from experts like Wes – professionals with decades of hands-on experience building the clean energy industry.

Transcript below.

Well, what I see that’s really happened, we’re going to ride the wave of this and see how it plays. There was this very optimistic forecast of complete adoption of electric vehicles and the complete phasing out of fossil fuels by 2030/2035. All these numbers are just around the corner.

So we built up globally this tremendous capacity of building primarily lithium cells of a couple different chemistries, primarily marketed for the EV space. And then we’ve gotten over our skis with EV adoption, and now there’s really this oversupply of battery capacity on the global market and the prices are falling incredibly.

And what we’re just now starting to see more and more is EV-focused battery manufacturers pivoting towards making stationary battery energy storage systems – BESS systems. I even saw Ford Motor Company announced just a couple days ago that one of their big plants domestically, they’re stopping making the Ford Lightning and they’re going to start making stationary BESS.

What’s driving that is this huge draw for data centers. It’s all about everybody’s favorite topic, AI. So on this macro level, it’s less about new chemistries, new technologies coming to the fore, but really a whole scale pivot from EV-focused to stationary-focused.

And so the impact in our space is going to be battery prices are going to be so low that even with tariffs and even with FEOC – that term, it’s Foreign Entity of Concern. It’s basically our government has put forth a list of countries that don’t get to play in the US without penalty. So China, of course, is number one on that list. But basically the Chinese battery manufacturers are just, to use that phrase, saying here, hold my beer. They don’t care. They’re just going to push batteries into our market that are so cheap that even with huge tariffs and even without ITC, it’s still the cheapest battery that we’ve ever seen.

So that’s going to continue to fuel the market. At some point that oversupply is going to correct and I think we’ll probably see a slight raise in prices, or at least a slowing of the reduction of pricing. But all it has to do is pencil out. And this big pull for data centers driven by AI is actually driving up electricity prices on the grid. So every time electricity prices go up, then our gear that displaces or supplements those grid electricity keeps looking better and better. So really, we’re in a position that’s win-win.

A couple of other things on tech… What I think is really fascinating is the Chinese companies that have focused on consumer-level electronics and batteries. So these little – what started out as just a little power bank then grew to be a little portable battery system for van life, and now it’s grown to the point where it’s whole home backup ca pable and focused directly at the end user and plug and play with flawless EMS systems run by an app.

These companies like Bluetti and Anker, these guys have actually been able to solve the residential energy storage equation way better than we in the industry legacy – the Outbacks and the Schneiders and the SMAs of the world – have struggled on how to make residential energy storage plug and play. And these guys are just like, okay, we’re going to show you how it’s done, and they’re selling it direct to consumers.

So the technology is actually in a way just going around the existing industry that I’ve been a part of. So I think that’s a really fascinating thing to see. And then we have two companies that pop into my mind that started in that direct-to-consumer space and are really two of the big growth engines in our industry, and that is Sol-Ark and EG4.

So these guys were always kind of the outsiders and the direct-to-consumers through the website kind of model. And now I’ve got peers of mine that I’ve worked with for years that are like, hey, I just took a position at EG4. I’m working at Sol-Ark. So we’re just seeing what happens in other industries. Everybody thought the BlackBerry was going to dominate the world and then all of a sudden the iPhone showed up and BlackBerries were obsolete. So I think we’re seeing that.

And then the last technology point, just to raise because it’s got a bit of a buzz, and it’s sodium-ion batteries. So there’s a lot of hype around sodium-ion. It’s basically just one element over on the periodic chart. So it has a lot of similarities to lithium and it’s essentially endless because we can extract it from seawater and so there’s sodium everywhere.

We’re seeing that technology mature to the level of prototyping and even start to see some commercialization. But LFP dominates our industry so strongly that I still see, even if on a data sheet sodium-ion is the next thing, I think it’s at least five years out before it becomes the thing that displaces the current thing. Because LFP does its job and does it well and keeps getting cheaper quarter over quarter, and all the manufacturing capacity that’s built up to build it would have to retool. I think maybe in 10 years sodium-ion will be the base battery, but I think LFP has still got it for the foreseeable future. Anyways, that’s my thoughts on technology.