LG Energy Solution has received requests from major U.S. defense contractors to supply batteries for unmanned weapons systems such as drones and is reviewing them. With the electric vehicle market sluggish, LG Energy Solution's business scope has expanded from electric vehicles to energy storage systems (ESS), and now it appears possible the range could widen to the defense sector.
LG Group had not engaged in defense-related businesses after it split from LIG Group, which includes the integrated defense contractor LIG Nex1. That is why simply mentioning the possibility of cooperation with U.S. defense contractors is drawing attention.
According to the battery industry on the 21st, Bob Lee (Lee Hyuk-jae), head of North America at LG Energy Solution, said in an interview reported by Bloomberg on the 19th (local time), "We have received inquiries from multiple U.S. companies about cooperation in the defense sector," and "We are being very careful in reviewing how to approach this area (cooperation in the defense sector)."
It is possible the U.S. government and major defense contractors are also discussing defense-sector cooperation with battery corporations other than LG Energy Solution. However, the market sees the mere mention within LG Group of cooperation in the defense sector as a major change, because LG Group has kept its distance from the defense industry.
In the past, LG Precision, related to the defense industry, existed under LG Group. In 2000, during the tenure of former LG Group Chairman Koo Bon-moo, LG Precision changed its name to LG Innotek. Later, as LIG Group split off from LG Group, LG Innotek's defense business unit was spun off in 2004 to become today's LIG Nex1.
After splitting with LIG Group and GS Group, LG Group has implicitly maintained non-overlapping business areas. In the interview, the head said, "Similar to how consumer-goods corporations draw a line by saying they won't go into 'alcohol or tobacco,' LG has also maintained a cautious stance on the defense institutional sector."
Also, while supplying batteries to the defense sector could immediately help earnings for LG Energy Solution, it does not seem like an easy decision because LG Group could suffer damage to its brand image, such as receiving negative assessments from global ESG rating agencies.
Moreover, with U.S.-China tensions escalating, if it enters the U.S. defense industry, LG Group affiliates could face disadvantages when doing business in China and elsewhere.
Still, looking at the battery business alone, there are ample business opportunities in the defense sector. Demand for defense-sector batteries is increasing with the spread of unmanned systems, from jammers to unmanned aerial vehicles and unmanned ground vehicles.
According to global market analysis firm Fortune Business Insights, the global military battery market is expected to grow from $2.4 billion in 2025 to $2.57 billion in 2026 and $5.22 billion in 2034. The compound annual growth rate from this year to 2034 alone reaches 9.3%. Among these, North America's market share stands at 36.25%, leading the military battery market.
In particular, as the U.S. government prepares legislation to ban the use of Chinese batteries in new weapons, interest in batteries manufactured by Korean corporations is inevitably rising. Under the National Defense Authorization Act enacted in 2023, the Ministry of National Defense banned procurement of batteries from six Chinese companies, including CATL and BYD, starting in Oct. 2027.
If LG Energy Solution decides, it can supply drone batteries even now. In March, at InterBattery 2026, LG Energy Solution unveiled a blood-transport drone equipped with its 2170 cylindrical battery (a lithium-ion battery measuring 21 mm in diameter and 70 mm in height).
The 2170 cylindrical battery uses a standardized specification, making supply and demand easy, and it is finished with an aluminum can, so it can be used not only in military drones and unmanned aerial vehicles but also in unmanned ground vehicles and surveillance and reconnaissance robots.
A battery industry official said, "In effect, the only alternatives to Chinese batteries are Korean corporations, so it is natural for the U.S. government to reach out," but added, "For Korean battery corporations, the very nature of defense is the factor that determines whether to enter the market."