LG Energy Solution Expands ESS Production in Michigan with $1.4 Billion Debt Guarantee
LG Energy Solution announced it will begin full-scale production of lithium iron phosphate (LFP) batteries for energy storage systems (ESS) in the U.S. in the second half of 2025. The expansion is supported by a 2 trillion won ($1.4 billion) debt guarantee to fund facility investments at its Michigan plant.
Originally designed as a North American EV battery manufacturing base, the Michigan facility will now include an ESS production line. This marks LG Energy Solution’s first ESS facility in the U.S. Industry estimates suggest an annual production capacity of approximately 17 gigawatt-hours, enough to supply electricity to around 12.7 million U.S. homes.
The LFP batteries produced at the facility will utilize a pouch cell design, offering higher energy density and a stable state of charge system. LG Energy Solution will also integrate a cloud-based software solution for real-time monitoring and performance analysis of ESS operations.
The expansion aligns with the U.S. government’s planned tariff increase on Chinese-made ESS, set to rise to 38.4% in 2026 following an executive order from the Trump administration. Currently, Chinese firms dominate the global ESS market, with an 86% share led by CATL, BYD, and EVE. Price competition has intensified as Chinese manufacturers have lowered ESS prices in the U.S. to under $100 per kilowatt-hour, widening the price gap with Korean competitors.
Despite a broader slowdown in EV demand leading LG Energy Solution to reduce overall production facility investments by 20-30% this year, the company is prioritizing large-scale ESS investments.
In addition to its ESS expansion, LG Energy Solution has announced a 3.6 trillion won debt guarantee for the acquisition of the third Ultium Cells battery plant, a joint venture with General Motors, also located in Michigan. The deal is expected to solidify the company's North American EV market position as it navigates industry challenges and rising tariffs.
