"LG Energy Solution has begun mass production of lithium iron phosphate (LFP) batteries for energy storage systems (ESS) at its plant in Holland, Michigan."
Evaluations have emerged that this statement, announced by LG Energy Solution on the 1st, contains the strategies of the Korean battery industry. Targeting the North American ESS market and shifting to the LFP market, which has been led by China until now, is a common strategy of the recent Korean battery industry.
Along with LG Energy Solution, Samsung SDI and SK On are ramping up their efforts to penetrate the U.S. ESS market. With the electric vehicle market in a slump, they have turned to ESS as an alternative. The demand for ESS for the power grid is increasing as the U.S. establishes large-scale data centers to expand artificial intelligence (AI) infrastructure.
Initially, LG Energy Solution planned to establish a new plant in Arizona to produce LFP batteries for ESS, starting mass production in 2026. However, LG Energy Solution has accelerated the timeline by converting part of the Holland, Michigan, plant into a production line for ESS.
Samsung SDI and SK On aim to begin mass production of LFP batteries for ESS next year. Samsung SDI signed an ESS battery supply contract worth 434.7 billion won with North American power company NextrEra Energy in March. SK On also signed an MOU with the U.S.-based IHI Terrasun in September of last year to strengthen collaboration in the North American ESS business. A representative from SK On noted, "We are focusing on winning ESS contracts in North America. We expect results to come soon."
Currently, it is estimated that more than 80% of the global ESS battery market is dominated by Chinese companies such as CATL. However, opportunities for Korean battery companies emerged in the North American market as the Donald Trump administration imposed tariffs on imports from China. The Korean battery companies are not affected by the tariffs since they have battery plants located in North America.
The three Korean battery companies have also adopted LFP batteries, which China primarily focuses on, for ESS. Korea has produced nickel-cobalt-manganese (NCM) batteries, which are more expensive than LFP batteries but have a higher energy density. However, as China has begun to release LFP batteries with improved energy density, interest has shifted towards LFP.
An industry official stated, "It is important for ESS to deliver stable output from a fixed location. There is a prevailing opinion that expensive NCM batteries are not necessary and that LFP batteries alone are sufficient."