The GM Ford defence energy rivalry, one of the oldest in American industry, has extended well beyond car sales into military contracts and grid-scale power storage, with both automakers now competing for government dollars and energy infrastructure business as their core vehicle operations face headwinds.
Energy storage systems, or ESS, use much of the same underlying technology as electric vehicle batteries to store power for homes, businesses and utilities. Military vehicles, meanwhile, draw on the same mass-manufacturing expertise that made both companies household names. That overlap is at the heart of why both firms are moving into these two fields at the same time.
Battery factories find a new purpose in the ESS market
Both GM and Ford invested billions of dollars in plants designed to produce battery cells for electric vehicles, a market whose growth has not matched earlier expectations. Rather than selling those facilities, both companies are repurposing them for energy storage systems, a sector that Global Market Insights estimates will grow from $668.7 billion in 2024 to $5.12 trillion by 2034.
Devon Wilson, vice president of sales and marketing at LG Energy Solution’s U.S. energy storage division, put the underlying driver plainly at a recent event: ‘There’s a massive amount of just fundamental electricity need within the country.’ Rising consumer energy costs and the electricity demands of data centres are both cited as forces behind that need.
Ford said in December that it plans to spend $2 billion to launch an energy business, converting a Kentucky battery factory it had recently built with partner SK On to make ESS units by late 2027. It also plans to use factory space in Marshall, Michigan for residential storage cells. Ford Energy sits inside the company’s Model e electric vehicle segment, which has guided for $4 billion in losses in 2026 before reaching breakeven by 2029, with the ESS business expected to be a key turning point.
Morgan Stanley analyst Andrew Percoco described Ford’s ESS business in an investor note in June as an ‘underappreciated driver’ of a path to profitability for Model e. Ford chief executive Jim Farley told investors on the second-quarter earnings call in July that the company is in the ‘third inning’ of selling out its 20 gigawatt hours of ESS production capacity, after announcing a five-year framework agreement with renewable-energy service provider EDF Power Solutions North America.
GM’s position in energy storage is further advanced in some respects. Its Ultium Cells joint venture in Tennessee already produces cells for partner LG Energy Solution for storage, and GM also has a partnership with Redwood Materials for reusing large EV batteries in ESS applications. Longer-term, GM could move into next-generation sodium-ion batteries through a collaboration with Denver-based startup Peak Energy. Kurt Kelty, GM’s vice president of battery and sustainability, said the technology could reshape grid-scale energy storage: ‘The ESS market is a very attractive market. It’s a big market. It’s growing very quickly, and it’s something that we can contribute to.’
Morningstar senior equity analyst David Whiston framed the logic simply when speaking to CNBC: ‘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 capitalise on the data centre boom.’
Defence contracts place GM and Ford back on the battlefield
The GM Ford defence energy rivalry has a historical dimension that predates both companies’ current leadership. During the Second World War, both firms were central to what became known as the ‘Arsenal of Democracy’, converting their production lines to supply Allied forces. That legacy is now being revived under different circumstances.
GM resurrected its defence unit in 2017 after a 14-year hiatus and is years ahead of Ford in building a military business. The company expects its 2026 defence revenue to grow to almost $700 million and is targeting positive results on an earnings before interest and tax basis this year. GM chief executive Mary Barra told investors in July that the company is working with Lockheed Martin and other firms to expand the defence industrial base, with the goal of making GM Defense ‘a more meaningful and diversified contributor to our earnings.’
The scale of individual contracts gives a clearer sense of where GM Defense currently sits. According to GovConWire, the U.S. Army awarded GM Defense an $18.8 million firm-fixed-price contract to supply Infantry Squad Vehicles, or ISVs, and related equipment, as part of a broader contract valued at approximately $458.4 million. The ISV is a lightweight tactical vehicle designed to move small infantry units quickly across terrain.
Both GM and Ford are now competing for the next stage of that programme. According to Inside Defense, Ford, GM Defense and BC Customs each won other transaction authority agreements on 30 June to provide the Army with three Infantry Squad Vehicle-Heavy prototypes by the end of March next year. As Military Times reported, the six-seat ISV-Heavy platforms will then be tested with the Army Test and Evaluation Command.
Ford has been less forthcoming about its broader defence ambitions, though it recently announced a tie-up with General Dynamics Land Systems and engineering firm Ricardo to compete for the United Kingdom’s Ministry of Defence Light Mobility Vehicle programme. Alfred Grein, executive director for research and technology integration for the U.S. Army Combat Capabilities Development Command Ground Vehicle Systems Center, told CNBC that domestic manufacturing expertise is exactly what the military is looking for: ‘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.’
Whiston offered the most direct summary of what both companies are chasing: ‘They’re looking for new verticals.’ The ISV-Heavy prototype deliveries due by the end of March next year will be among the first concrete tests of whether that search is paying off in defence, while Ford’s ESS production coming online in 2027 will mark the equivalent milestone in energy.
