LG Energy Solution readies to start LFP battery production for ESS in US this year
LG Energy Solution announced Wednesday that it will launch full-scale production of lithium iron phosphate batteries for energy storage systems in the US during the second half of this year. The expansion is backed by a 2 trillion won ($1.4 billion) debt guarantee to fund facility investments at its Michigan plant.
Originally designed as a North American EV battery manufacturing base, the Michigan plant will now incorporate an ESS production line on a site previously reserved for expansion. This marks LG Energy Solution’s first ESS production facility in the US.
While the company has not disclosed annual production capacity, industry sources estimate it to be around 17 gigawatt-hours, enough to supply electricity to approximately 12.7 million US homes.
The LFP batteries produced for ESS will use a pouch cell design, which, despite generally lagging behind prismatic cells in safety, offers higher energy density and a more stable state of charge system. LG Energy Solution will also provide a cloud-based software solution for real-time monitoring and performance analysis of ESS operations.
With this expansion, the battery maker aims to capitalize on the upcoming US tariff hike on Chinese-made ESS, set to take effect in 2026. Following an executive order from the Trump administration, which imposed an additional 10 percent tariff on all Chinese goods, tariffs on Chinese battery-powered energy systems will rise to approximately 38.4 percent.
According to market tracker SNE Research, Chinese companies controlled 86 percent of the global ESS market in 2023, led by CATL, BYD and EVE. Chinese firms have aggressively lowered ESS prices in the US — the world’s second-largest ESS market — to below $100 per kilowatt-hour, further widening the price gap with Korean competitors.
Despite plans to cut production facility investments by 20-30 percent this year due to a global downturn in electric vehicle demand, LG Energy Solution is proceeding with large-scale ESS investments.
An LG Energy Solution official stated,
This 2 trillion won debt guarantee will not increase our financial burden, as it was already outlined in our investment plan for this year,
“We will carry out targeted investments to enhance operational efficiency.”
On the same day, LG Energy Solution also announced a 3.6 trillion won debt guarantee to acquire the third Ultium Cells battery plant, a joint venture with General Motors, also in Michigan. The acquisition deal is expected to strengthen its position in the North American EV market amid the ongoing EV industry slowdown.
An industry source on condition of anonymity, said :
Amid the prolonged EV chasm, further exacerbated by tariff hikes, facility investments have become increasingly financially draining,
“However, given that building a battery manufacturing plant in the US costs tens of trillions of won, LG Energy Solution’s acquisition of the Ultium Cells plant could be a cost-effective strategy — especially with the projected long-term growth in demand for fully electric vehicles.”
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LG Energy Solution readies to start LFP battery production for ESS in US this year, source
