A few years ago, battery manufacturer LG Energy Solution was racing to make cells for electric vehicles. Today, its focus has mostly flipped to a new product: energy storage batteries.
Most of LG Energy’s North American factories are making energy-storage batteries, or gearing up to, said Robert Lee, the company’s president for the region. Demand for large battery cells to store power is booming from the buildout of AI data centers.
It has been a frenetic pivot for battery companies and automakers, which poured tens of billions into U.S. battery factories early this decade in anticipation of an EV boom that has not materialized.
South Korea’s LG Energy, which says it is North America’s largest battery maker by number of cells produced, said five of its eight factories in the region will be making batteries for energy storage systems, or ESS, by the end of this year.
“We’re highlighting ESS right now because that was the growth that we didn’t expect,” Lee said during an opening event on Tuesday at LG Energy’s factory in Lansing, Michigan.
The Lansing plant recently began making energy-storage cells for Tesla and for utilities. Tesla is among the leaders in the ESS market. The factory is also making batteries for Toyota Motor EVs.
Moving to ESS batteries has been more complicated than flipping a switch. LG Energy needed to develop a new battery chemistry that it had little experience with: lithium iron phosphate (LFP), a market that has been dominated by Chinese manufacturers.
LFP batteries also are used in EVs, but they have lower energy density than nickel-based batteries — LG Energy’s specialty — which means shorter driving ranges. But the LFP chemistry also is considered safer and more durable, making it suitable for storing large amounts of energy from a power plant.
The Lansing facility, LG Energy’s seventh production plant in North America, operates as a hybrid hub producing both LFP cells for ESS and nickel-based batteries for EVs. Annual production capacity is expected to reach 35 gigawatt-hours or more.
The Korean company acquired the Lansing plant, originally a joint venture with General Motors, in February 2025. It has since converted part of the EV-dedicated production equipment into ESS lines.
With Lansing now operational, LG Energy has completed its network of five ESS production bases across North America. The company operates three wholly owned facilities — in Lansing and Holland, Michigan, and the NextStar Energy plant in Ontario, Canada — plus two joint-venture sites: the L-H Battery Company plant in Ohio with Honda and the Ultium Cells facility in Tennessee with GM.
LFP cells produced at Lansing will be supplied to North American power infrastructure and AI data center customers through Vertech, LG Energy’s ESS system integration subsidiary. The company has already signed a supply agreement with Tesla worth approximately 6 trillion won ($4.3 billion), with prismatic LFP battery production slated to begin next year.
For EVs, batteries from Lansing will be installed in models including the 2027 Toyota Highlander, which is manufactured at Toyota’s Georgetown, Kentucky, plant. LG Energy signed a battery supply contract with Toyota in 2023.
The move to ESS was well-timed for battery and car companies that had sunk so much money into plants to make EV batteries. But it likely will not fully absorb all of that factory space.
Consultancy Benchmark Mineral Intelligence expects demand for stationary batteries in North America to hit 76 gigawatt-hours this year. And while storage demand is expected to nearly double over the next five years, to 125 GWh, Benchmark does not expect that to be enough to cover excess capacity installed for EVs.
LG is still making nickel-based EV batteries. The joint-venture plant it has with General Motors in northeast Ohio this week restarted production of cells for GM EVs after a seven-month shutdown.
“EVs will come back, and it will account for a majority of the passenger vehicles in the U.S. eventually,” Lee said. “It’s really just a matter of time.”
Kim Dong-myung, CEO of LG Energy Solution, described the Lansing plant’s launch as “an important milestone that will accelerate the growth of LG Energy Solution’s North American business.”
“We will build a state-of-the-art battery manufacturing network that will support the future of the U.S. mobility industry and energy infrastructure, strengthen the U.S. battery ecosystem, and expand local production capabilities,” Kim said.
The opening ceremony was attended by Michigan Governor Gretchen Whitmer, U.S. Interior Secretary Doug Burgum, and Republican Representative Tom Barrett, along with Hong Sang-woo, Chicago Consul General, and Choi Dae-sik, head of LG Energy Solution’s Michigan entity.
The strategic shift underscores how quickly battery makers have had to adapt. With EV adoption growing slower than initially projected, companies that bet heavily on automotive electrification are now racing to capture demand from the data center boom, where massive power requirements are driving unprecedented interest in grid-scale storage.
For LG Energy, the ESS pivot represents both an opportunity and a hedge. While storage demand may not fully offset the idle EV capacity, it provides a revenue stream that was largely unanticipated just a few years ago — and positions the company to capture growth in a market that is expanding rapidly alongside the AI buildout.