Korean battery makers seat ESS at the forefront of AI-age global drive
By Kim Dong-youngPosted : November 5, 2025, 16:58Updated : November 5, 2025, 17:00
Graphics by AJP Song Ji-yoon
SEOUL, November 05 (AJP) - South Korean battery manufacturers are pressing ahead with aggressive global expansion and investment plans despite multiple headwinds - overcapacity worries, rising trade barriers, stalled growth in electric vehicles and China's overwhelming dominance - as they bet on rechargeable batteries becoming the dominant clean-energy infrastructure of the AI age.
Top three battery makers are doubling their U.S. production capacity to 600 gigawatt-hours (GWh) annually by end-2026 from about 300 GWh now, even as U.S. EV sales stagnate.
Sales reached roughly 607,000 units in the first half of this year, up just 1.5 percent from 597,500 a year earlier, according to Cox Automotive, and the elimination of the $7,500 federal EV tax credit in September is expected to weaken demand further.
Graphics by AJP Song Ji-yoon
The financial impact has already begun to show. LG Energy Solution posted third-quarter revenue of 5.7 trillion won ($3.93 billion) with operating profit of 601.3 billion won. Samsung SDI reported revenue of 3.05 trillion won but swung to an operating loss of 591.3 billion won. SK On logged revenue of 1.81 trillion won with an operating loss of 124.8 billion won.
Amid the slowdown in EV demand, Korean battery makers are rapidly shifting focus to energy storage systems (ESS), which store electricity generated from solar and wind farms for release during peak demand.
The pivot comes as AI data centers require unprecedented and highly stable power loads.
According to SNE Research, the global ESS market is projected to expand sixfold from 185 GWh in 2023 to 1,232 GWh by 2035, with the U.S. market also expected to grow sharply as electricity demand surges.
China dominates ESS as well, but narrowing access to Chinese batteries under the Trump administration's trade barriers could open opportunities for Korean firms.
"The decoupling of the U.S. from China is expected to accelerate in areas with high Chinese dependency such as ESS batteries and graphite, which will serve as an opportunity for Korean battery companies," said Lee Jin-myung, an analyst at Shinhan Securities.
A worker inspects production line at LG Energy Solution's plant in U.S. Michigan/ Courtesy of LG Energy Solution
LG Energy Solution has already begun converting EV battery lines to ESS production. The company started mass production at its Holland, Michigan plant in June after retooling the facility. The plant now has 16 GWh of capacity, which LG Energy aims to expand to 30 GWh by end-2025. "It could grow beyond 30 GWh," said Kim Dong-myung, president of LG Energy Solution, at an industry event on Oct. 30.
The company is reviewing additional conversions.
On Monday, LG Energy and Stellantis said their joint venture in Canada will convert some of its nickel manganese cobalt (NCM) battery lines to cheaper lithium iron phosphate (LFP) production for ESS.
Samsung SDI has secured substantial ESS orders as well. The company plans to convert its Stellantis joint venture in the United States to ESS production with a target of 30 GWh annual capacity by end-2025.
Samsung SDI will also supply Tesla with more than 3 trillion won worth of ESS batteries over three years, delivering about 10 GWh annually starting this year, according to industry sources on Nov. 3.
SK On is joining the bandwagon. The company won a 1 GWh ESS supply contract in the United States in September and will convert part of its standalone Georgia plant to meet the order, with additional U.S. lines possibly repurposed depending on demand.
Industry experts say Korean firms are preparing for strategies that go beyond ESS, as Chinese batteries remain difficult to beat on price and performance.
LG Energy Solution's battery containers/ Courtesy of LG Energy Solution
"With the introduction of cell-to-pack technology, cheap LFP batteries have proven quite competitive against NCM batteries for lower-priced EV models like Tesla's Model 3 or Model Y," said Kim Ki-jae, professor of battery science and engineering at Sungkyunkwan University.
He added that Korean manufacturers are working to improve nickel-based batteries to match their cheaper counterparts, with companies such as EcoPro continuing to focus on high-nickel cathodes.
"Korean firms could also focus on developing batteries for urban air mobility and robotics. They could really capture significant portions of market share," said Kim.
