Powering a shift to data center demand
Perspectives from BofA Global Research’s Leading Analysts
July 7, 2026
Alex Perry, Senior Research Analyst, Autos
Auto companies diversifying to higher-growth end markets
A key theme we see emerging across the auto value chain is automotive companies leveraging their industrial footprint and scale to expand into faster-growing, higher-margin end markets. We think power generation and energy storage, especially for data centers, are the most tangible near-term opportunities, given the ability for automakers/suppliers to scale quickly in a market where speed to power is the number-one purchasing criteria. The divergence in end-market growth profiles between the two markets creates a clear incentive to pursue non-auto opportunities as the IEA projects U.S. data-center electricity consumption to grow at a 15% CAGR through 2030 vs. S&P forecasts for +1% global auto production CAGR over the same time frame.
Automakers and suppliers are repurposing and investing in underutilized assets to produce new solutions targeted at higher-growth end markets.
For example, Ford is rolling out a battery energy storage solution in a former electric vehicle battery plant. Battery energy storage systems (BESS) demand is building across utilities, commercial and industrial customers, and AI data centers, and Ford is leveraging its manufacturing capabilities, supply-chain depth and commercial reach in a market where speed is increasingly important. U.S. automakers are also likely to qualify for favorable domestic manufacturing tax credits, thus making their solutions more profitable and competitive. General Motors also will be entering the energy-storage market with sodium-ion battery cells, with production expected by the end of the decade.
Power generation for data centers is an opportunity
BorgWarner, historically a large auto supplier, recently announced a power-generation solution specifically targeting AI data centers. The system leverages ~80% auto-derived components integrated into a turbine generator capable of primary power and backup applications. With large-frame, aeroderivative and industrial turbine lead times extending into 2H29, speed to power is becoming increasingly important for data-center operators. We think this supports demand for modular solutions, which can enable faster behind-the-meter capacity additions.
Aerospace and Defense looks attractive for auto companies
We think aerospace and defense is a higher-growth and higher-margin market that is attractive for legacy automakers and suppliers. General Motors recently announced an agreement with Lockheed Martin that’s likely to leverage GM’s capabilities in high-volume manufacturing to rebuild depleted munitions. Aptiv, a traditional auto supplier, is seeing higher growth in Aerospace and Defense, and already has content on all of the top commercial aircraft models.
Prediction markets bet on football
While the regulation picture looks murky, competition in prediction markets will be fierce this fall as marketing efforts amp up and U.S. sports betting hits its peak.
