LG Energy becomes first to mass-produce LFP batteries
LG Energy Solution has begun mass production of lithium iron phosphate (LFP) batteries for energy storage systems (ESS) at its plant in Holland, Michigan, as the first global battery manufacturer to do so in the United States.
LG Energy announced the move on Sunday as part of its strategy to respond to temporary stagnation in EV demand and increasing price competition from Chinese battery makers.
The company is the only one to have established a large-scale production line for ESS-dedicated LFP batteries in the United States among major battery manufacturers such as China’s CATL and BYD, Japan’s Panasonic and Korea’s two other leading firms, Samsung SDI and SK On.
LG Energy has already secured supply agreements with local energy firms including Delta and TeraGen.
“Producing LFP batteries for ESS locally allows us to avoid tariffs, which gives us a significant price competitiveness advantage over our rivals,” a company spokesperson said. “We expect this to strengthen our position in the North American ESS market despite policy uncertainties. We will move quickly to meet growing ESS demand from sectors such as data centers and renewable energy.”
The two key factors behind this decision are the rapid growth of the ESS market and the suitability of LFP technology.
With the EV market showing signs of stagnation, Korea’s battery makers have turned their attention to ESS as a new growth driver.
Demand for ESS has surged not only for renewable energy management but also for powering AI data centers.
Market research firm SNE Research projects the global ESS market will expand from 185 gigawatt-hours in 2023 to 1,232 gigawatt-hours by 2035.
Chinese firms such as CATL and BYD currently dominate over 80 percent of the global ESS battery market. But ongoing U.S. tariff policies targeting Chinese goods, which began under the Donald Trump administration, are expected to erode their price advantage in North America.
Washington has already banned Chinese batteries from military facilities, and further restrictions on Chinese battery imports remain likely.
Against this backdrop, LG Energy aims to fill the gap and establish a strong foothold in the North American ESS market. The New York Times reported that the company could meet up to 25 percent of ESS-related LFP battery demand in the United States through its new production capacity.
Korea’s major battery makers focused primarily on nickel-cobalt-manganese (NCM) batteries until recently.
Though more expensive ? typically by 20 to 30 percent ? NCM batteries offer higher energy density, which translates to longer EV driving range. But the landscape has shifted as Chinese manufacturers have improved the energy density of LFP batteries and aggressively priced them to undercut NCM rivals.
In the ESS sector, where batteries remain in fixed positions and prioritize stable output over range, LFP technology is increasingly seen as more appropriate, with Korean firms now revisiting their LFP strategies.
LG Energy originally planned to begin LFP battery production for ESS in 2026 at a new plant in Arizona. But the company accelerated the timeline by repurposing part of its existing EV battery facility in Holland, Michigan, into an ESS production line.
Korean battery makers are also pushing ahead with LFP development for electric vehicles.
LG Energy plans to begin mass production of LFP batteries for EVs by the end of this year. Samsung SDI and SK On plan to follow as early as next year.