GM’s Battery Pivot Follows the Power Demand Boom
The Spring Hill plant shifts to energy storage as EV demand slows and data center power needs rise.
On January 5, 2026, Ultium Cells, a joint venture between General Motors (GM) and LG Energy Solution, furloughed 710 workers at its Spring Hill battery plant in Smyrna, Tennessee. The company has now recalled those workers to return by late April, after investing $70 million to retool the facility to produce batteries for energy storage systems.
The shift comes as automakers adjust electric vehicle production and battery demand moves toward energy storage applications, including grid infrastructure and data center operations.
Spring Hill opened in 2024 to manufacture batteries for General Motors’ electric vehicles and was designed to employ up to 1,350 workers. The facility stopped EV battery production before being retooled for energy storage systems.
EV Demand Slows as Data Center Demand Rises
Automakers reported slower EV demand in 2025 and adjusted production plans. General Motors said it was pacing EV output based on demand conditions.
Others have also faced a downturn and have taken different approaches to offset it.
Ford reported continued losses in its EV division and reduced planned investments in electric vehicles. The company said it would align production levels with demand rather than earlier growth targets, as it focused on improving its software offerings in 2026. Tesla reduced prices across several vehicle models during 2025, as the company’s delivery growth slowed.
Read more: Ford Bets Its Future on Software. The Numbers Say It's Working.
On the battery manufacturer side, GM partner, LG Energy Solution said it was expanding energy storage system production. SK Battery America, and Samsung SDI also announced changes to production and investment plans related to energy storage systems.
These business shifts are backed up by industry reports.
Gartner reports that global battery storage capacity is increasing as utilities and infrastructure operators expand deployment. Global data center electricity consumption reached 448 terawatt hours in 2025 and is projected to approach 980 terawatt hours by 2030.
This demand is a product of large data centers requiring continuous electricity supply and operate at scales comparable to tens of thousands of households, according to the International Energy Agency (IEA).
U.S. energy data from Pew Research shows that data centers account for a significant share of electricity consumption in states including Virginia, North Dakota, Nebraska, Iowa, and Oregon.
Part of the solution is energy storage. The U.S. Department of Energy highlights energy storage systems, used to balance electricity supply and demand and support grid stability.
Ultium Cells said the Spring Hill facility would produce lithium-iron-phosphate batteries for these energy storage systems, including applications supporting grid infrastructure and data center operations.
Why Energy Storage Demand Is Expanding
Data centers require uninterrupted power supply to maintain operations. Even short disruptions can affect computing workloads and service availability.
Battery systems are used as part of uninterruptible power supply infrastructure. These systems provide immediate backup power in the event of grid interruptions.
Energy storage systems are also used to manage variability in electricity supply. Renewable energy sources such as solar and wind produce power intermittently, requiring storage to balance supply over time.
Utilities deploy large-scale battery systems to store excess energy and release it during periods of high demand.
These systems are used for load shifting, frequency regulation, and grid stabilization, according to the U.S. Department of Energy. It reports that grid-scale battery storage installations have increased in recent years as utilities expand deployment.
As data center power usage increases and utilities expand grid infrastructure, demand for stationary battery systems has grown, creating opportunity for a shift in battery production priorities for companies like Ultium Cells.
Battery Chemistry and Retooling at Spring Hill
Battery chemistry differs between vehicle and stationary applications. EV batteries typically use nickel-based chemistries to maximize energy density and extend driving range.
Energy storage systems commonly use lithium-iron-phosphate chemistry, which prioritizes cost, stability, and cycle life. Lithium-iron-phosphate batteries offer longer cycle life and improved thermal stability compared to nickel-based chemistries, a fact that has been emphasized by The U.S. Department of Energy.
In addition, Lithium-iron-phosphate batteries are generally lower cost than nickel-based batteries, with cost differences depending on scale and application, with prices dropping to a record low in December 2025, according to BloombergNEF.
General Motors has said its Ultium battery platform supports multiple cell formats and chemistries. The $70 million investment used for this retooling effort at the plant and production is stated to ramp up in Q2 2026, according to Ultima Cells. The company also said workers were recalled as part of that production restart.
“Spring Hill is becoming a key hub in our North American ESS manufacturing footprint which has helped offset slower than expected EV demand,” Bob Lee, President of LG Energy Solution North America, said in the Ultium Cells press release, reaffirming the shift in demand.
AIM Media House has reached out to General Motors and Ultium Cells for details on the distribution of the $70 million investment in retooling the Spring Hill facility.