AI Is Taking Over the Battery Factories Built for the EV Boom

America built a battery industry for an electric-car revolution that arrived much more slowly than promised. Now the same factories are being retooled to keep power flowing to AI data centers.

The scale of the NextStar plant in Windsor, Ontario, reflects the billions poured into North American battery manufacturing during the EV investment surge. Photo: Steve Russell/Toronto Star via Getty Images

When American politicians and carmakers began building a new “battery belt” across the Midwest and South, they expected millions of electric vehicles to roll out of nearby factories. Companies invested tens of billions of dollars, Washington offered generous tax credits, and vast plants were designed to turn out increasing numbers of batteries each year. Electric-car sales did not grow quickly enough to fill all that capacity.

LG Energy Solution has just opened a 226-acre factory outside Lansing, Michigan, capable of producing more than 35 gigawatt-hours of batteries annually. The plant is expected to employ 1,700 people at full production. Some of its cells will power the 2027 Toyota Highlander EV. But many others will go into stationary energy storage systems.

These systems consist of enormous banks of batteries used by utilities, industrial sites and technology companies. By the end of this year, five of LG Energy Solution’s eight North American factories will be producing storage batteries or preparing to do so.

Robert Lee, the company’s president for North America, told Reuters that the sudden demand represented growth LG had not anticipated. LG now plans to triple its revenue from stationary storage this year, with orders from utilities and technology companies making up for some of the shortfall from carmakers.

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Why AI Needs Batteries

Artificial intelligence runs inside physical buildings packed with specialized chips, cooling equipment and networking hardware. All of it requires electricity around the clock. A large data-center complex can consume as much power as a small city, and developers are planning clusters of them in regions where the grid was never designed to handle such concentrated demand.

An electricity grid must keep production and consumption in balance at every moment. Electricity cannot simply remain in transmission lines until somebody needs it. When demand suddenly rises above available supply, operators face instability, higher prices and, in extreme cases, blackouts.

Rows of container-sized batteries allow utilities to store electricity when it is plentiful or cheap and release it within seconds when consumption rises. They can absorb surplus power from solar and wind installations, cover brief peaks in demand and keep facilities running while conventional generators respond. Data centers also need protection against even brief interruptions, which can damage equipment and disrupt services used by millions of customers.

Storage batteries do not solve the underlying need for more power stations, transmission lines and grid connections. They merely make the available electricity easier to manage and provide a buffer when supply and demand no longer match.

Global electricity consumption by data centers is expected to more than double by 2030, reaching about 945 terawatt-hours, according to the International Energy Agency. That is slightly more electricity than Japan consumes today. In the United States, data centers could account for almost half of the growth in power demand through the end of the decade.

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A Different Kind of Battery

Producing storage batteries requires different materials and manufacturing processes from those used for many electric-car batteries. LG has traditionally specialized in nickel-based cells, which offer high energy density and allow more energy to be packed into a smaller, lighter battery. That is useful inside a car, where additional weight reduces driving range and efficiency.

Stationary systems commonly use lithium iron phosphate, or LFP, batteries. They store less energy for their size but are regarded as safer and more durable. Their greater weight matters little in stationary applications, where batteries can remain beside a power station or data center and be charged and discharged repeatedly over many years. LG had limited experience with this chemistry, while Chinese manufacturers have long dominated the LFP market.

The company therefore had to develop new cells and modify production lines while establishing an American supply chain. At Lansing, LG will manufacture LFP cells for stationary storage alongside nickel-based batteries for Toyota’s electric vehicles.