LG Energy Solution is set to commence full-scale operation of its lithium iron phosphate (LFP) battery production line for energy storage systems (ESS) in the United States from the latter half of this year. This move aims to proactively respond to the rapidly growing North American ESS market demand.
On the 18th, LG Energy Solution announced it secured a debt guarantee worth 2.0319 trillion KRW for investing in ESS production facilities at its Michigan Holland plant. The company plans to utilize the expanded site at the Michigan Holland facility for the ESS line.
LG Energy Solution plans to complete preparations for operation in the first half of this year and start mass production in the second half. From 2026, the U.S. will raise import tariffs on Chinese ESS batteries, and the battery industry anticipates increased demand for locally produced batteries in North America from next year.
Previously, in a Q3 earnings conference call last year, LG Energy Solution disclosed plans to improve the energy density of LFP ESS cells and begin mass production in the United States. They also indicated plans to provide differentiated value to customers by equipping integrated ESS solutions with advanced energy management software.
In addition, LG Energy Solution announced a decision to secure a debt guarantee of 3.6027 trillion KRW for the acquisition of the third plant of Ultium Cells, a joint venture with General Motors (GM). This guarantee concerns the anticipated acquisition funds upon signing the contract for the Michigan Lansing plant.
The company plans to finalize the main contract once specifics like contract terms and purchase price are determined. LG Energy Solution mentioned in an announcement they are considering acquiring the Ultium Cells’ third Michigan Lansing plant to address North American electric vehicle (EV) demand.
Industry experts view this decision as reducing the burden of building new plants for LG Energy Solution, allowing them to utilize existing facilities under preparation to meet customer demands. LG Energy Solution is actively pursuing efforts to maximize investment and operational efficiency through recent facility ‘rebalancing.’
They aim to enhance operational efficiency by reallocating overall North American capacity and reduce unnecessary costs, thereby cutting total facility investment (CAPEX). An industry source remarked that LG Energy Solution holds a competitive edge with a diverse product portfolio and customer base, enabling them to navigate the current temporary crisis flexibly through overall rebalancing to enhance investment and operational efficiency.
Meanwhile, LG Energy Solution stated there would be no additional financial burden from this debt guarantee. Previously, in their Q4 earnings announcement, they revealed plans to reduce production facility investment by 20-30% compared to last year, with this announcement included in this year’s planned CAPEX execution.