Honda begins producing batteries for data centers at a factory initially intended for electric vehicles that it decided to cancel.

      Honda has started manufacturing energy storage batteries at its Ohio facility, shifting focus from the canceled EV program that resulted in a $16 billion write-down. According to a report from Nikkei Asia, the plant was initially established to produce cells for electric vehicles, which were scrapped three months ago; now, those batteries are being sent to data centers instead of consumers’ homes.

      This change follows Honda's March decision to cancel three EV models intended for the U.S. market, leading to substantial financial losses and the company’s first annual deficit since going public. Honda operates the Ohio plant through a joint venture with LG Energy Solution, although it bought LG’s stake in the factory for nearly $3 billion late last year.

      The shift comes amid sluggish demand for electric vehicles in the United States. The expiration of the federal tax credit for new EVs last September, following its elimination by Congress, has contributed to declining sales as consumers who rushed to purchase vehicles to take advantage of the credit created a void in demand.

      Honda is not alone in redirecting battery production towards stationary storage. In May, Ford launched a $2 billion subsidiary, Ford Energy, to create grid-scale storage systems at a repurposed plant in Kentucky, while General Motors announced three partnerships in energy storage this month, including a sodium-ion battery development collaboration with Peak Energy. Tesla, which introduced the Megapack, reportedly makes about 30% gross margins on energy storage—double that of its vehicle sales.

      The market for stationary storage is rapidly expanding. U.S. installations of such systems reached a record nearly 10 gigawatt-hours in the first quarter of 2026, marking a 32% increase from the previous year, according to SEIA and Benchmark Minerals. This amount of battery capacity could produce approximately 120,000 electric vehicles.

      Further growth is anticipated, with SEIA predicting that annual installations could hit 110 gigawatt-hours by the decade's end—almost triple the current rate. Much of this demand is driven by data centers, along with a significant portion from grid operators leveraging batteries to stabilize power supplies and support wind and solar energy sources.

      For Honda, the rationale behind this strategy seems clear: the company invested heavily in battery production capacity for a non-existent EV program, and shifting to stationary storage allows it to utilize those production lines while the American EV market stabilizes. However, whether Honda can compete in a space where Tesla, Ford, and GM already hold an advantage remains uncertain.