South Korea's LG Energy Solution has completed its dramatic strategic shift from electric vehicle batteries to energy storage systems, with five of its eight North American factories now making batteries for energy storage systems, according to the latest reports. The company, which claims to be North America's largest battery maker by cell production volume, is now focusing on energy storage batteries as demand for large battery cells to store power surges from AI data center buildouts. Robert Lee, the company's president for the region, confirmed that most of LG Energy's North American factories are now making energy-storage batteries or gearing up to do so. This represents a frenetic pivot for battery companies and automakers who poured tens of billions into U.S. battery factories early this decade in anticipation of an EV boom that has not materialized. "We're highlighting ESS right now because that was the growth that we didn't expect," Lee told Reuters during an opening event at the company's Lansing, Michigan factory.
The Lansing facility has now begun producing energy-storage cells for Tesla and utilities, marking a significant milestone in LG Energy's ESS expansion. The Lansing plant, LG Energy's seventh production plant in North America, operates as a hybrid hub producing both LFP cells for ESS and nickel-based batteries for EVs. Annual production capacity is expected to reach 35 gigawatt-hours or more, with the Korean company having acquired the Lansing plant, originally a joint venture with General Motors, in February 2025. The facility has since converted part of the EV-dedicated production equipment into ESS lines, with LFP cells produced at Lansing being supplied to North American power infrastructure and AI data center customers through Vertech, LG Energy's ESS system integration subsidiary. The company has already signed a supply agreement with Tesla worth approximately 6 trillion won ($4.3 billion), with prismatic LFP battery production slated to begin next year. The plant will also make nickel-based cells for Toyota after a $1.5 billion order moved from LG's Holland, Michigan site, while that Holland site will instead make storage cells for DTE Energy. LG Energy shares rose 1.9% in Seoul on Wednesday, while the nation's benchmark Kospi index fell the most this month.
LG Energy is now exploring defense applications for the first time, entering early discussions with government officials and major defense contractors about batteries for drones and other unmanned military equipment. Robert Lee, the company's North America president, compared LG's previous defense mindset to consumer companies refusing to sell alcohol or tobacco, stating "That was kind of LG's perspective on defense, but we definitely see growth and opportunities." The company is in early talks with potential American partners, with several already reaching out to LG about defense applications. This defense pivot aligns with the Trump administration's efforts to rebuild munitions used in wars involving Iran and Ukraine, and to secure supply lines for drones and strategic technology. The move comes as commercial companies increasingly step into defense sectors, with Lee projecting the storage operation would be profitable by December 2025. The Trump administration last week announced tariffs of as much as 100% on imported drones and their components, a move that could speed a US decoupling of drone supply chains from China. Lee said he urged US Interior Secretary Doug Burgum, who attended Tuesday's event in Lansing, to consider measures that would restrict Chinese access to the energy storage market, stating "It's very important for us to become more independent and be self-reliant."
Consultancy Benchmark Mineral Intelligence expects demand for stationary batteries in North America to reach 76 gigawatt-hours this year, with storage demand expected to nearly double over the next five years to 125 GWh, as reported by Reuters. The energy storage sector is experiencing concrete growth driven by data centers needing power, utilities requiring backup, and the military seeking domestic supply. Industry experts see "very limited chance" of market oversupply, with Michael Sanders from Avicenne Energy noting that "between ESS and EV demand, even if it loses a little luster we don't need to worry about oversupply." The domestic battery market is expected to avoid excess capacity through 2035 or 2040. Lee anticipates the Lansing plant will reach its annual output of 35 gigawatt-hours by late 2027, while the company continues manufacturing nickel-based EV batteries, with its joint venture plant with General Motors in northeast Ohio recently restarting production after a seven-month shutdown. South Korean battery makers have been repurposing factory capacity for grid storage after North American carmakers dialled back EV plans and unwound joint ventures, with Samsung SDI Co acquiring General Motors' stake in an Indiana venture and converting the facility for energy storage production.
