Even Honda is moving into data centers

Honda this week began production of batteries for energy storage systems, according to a report from Nikkei Asia. This achievement makes Honda the latest car company to dive into the hot energy market.

The automaker’s shift toward energy storage comes three months after Honda It canceled its EV programs In the United States, electric vehicle batteries were to be manufactured at a plant in Ohio, which Honda operates in a joint venture with LG Energy Solution. Now, these cells are heading to data centers instead of lanes.

Honda’s pivot comes as demand for electric vehicles in the United States remains weak after the GOP repealed tax breaks, which were intended to stimulate electric vehicle and battery production in the United States. Stay down On an annual basis, this is partly due to consumers postponing their purchases to take advantage of tax breaks, which disappeared last September.

This uncertainty led Honda to dramatically change course, canceling three electric vehicles that were destined for the US market. The automaker took a $15.7 billion writedown last fiscal year, partly due to a restructuring of its electric vehicle strategy. Weakness in its business in China, where electric cars have surged, also contributed to the write-down.

But despite the restructuring, Honda has not dissolved its joint venture with LG Energy. And like Seemingly every other automakerincluding Tesla, Ford, General Motors, and Honda have decided that batteries are a big business in their own right.

The fixed storage market has been booming, growing by 32% year-on-year, According to According to a report from SEIA and Benchmark Minerals. In the first quarter of this year, energy storage systems with a capacity of 9.7 gigawatt-hours were installed. These are enough batteries to build approximately 120,000 electric cars.

Rapid growth is expected to continue. By the end of the decade, the report estimates that 110 gigawatt-hours of energy storage will be installed each year, nearly three times the size of the market.

It was a lucrative market too. Tesla, which has accounted for the majority of sales so far, is reaping more profits 30% gross profit On Megapacks and Powerwalls, it’s about double its margin on vehicles.

Many stationary batteries were installed in data centers, but a large portion of them ended up being connected to the grid. As battery prices fall, they have created a significant niche for grid stability while increasing wind and solar installations, making them more predictable generation sources.

Honda may not be sure how to approach the electric vehicle market in the United States, but it clearly wants to participate in the energy transition in one way or another.