Korean battery firms shift focus from EVs to energy storage systems in North America

Korean battery manufacturers are reordering their North American strategies, accelerating a move from supplying electric-vehicle cells to targeting large-scale energy storage systems as U.S. automakers pare back EV commitments and unwind joint ventures.

The retrenchment among carmakers has crystallised over the past year. Stellantis is reportedly weighing an exit from its Kokomo, Indiana, joint venture with Samsung SDI, StarPlus Energy, after transferring its Canadian battery stake in NextStar Energy to LG for a nominal sum. The company has disclosed multibillion-euro writedowns and has been reassessing capital allocation across its EV investments. According to Stellantis’ own statement, the partner arrangement in the United States would leave the automaker without battery production facilities on U.S. soil if it sells its stake. Bloomberg and Stellantis’ announcement have driven fresh scrutiny of the economics of co-investment in cell manufacturing.

The U.S. Department of Energy’s earlier proposal of a loan of up to $7.54 billion to support StarPlus underlined the strategic importance Washington places on domestic battery capacity, a policy thrust that remains in tension with recent corporate retrenchments. Meanwhile, GM has moved to transfer its Michigan cell plant to LG Energy Solution and Ford and SK On formally dissolved their joint venture, splitting three gigafactories between them so each can pursue independent supply strategies.

Faced with these shifts, LG Energy Solution, SK On and Samsung SDI have been loudly pivoting to the energy storage systems market in North America. Management commentary and earnings calls disclose plans to chase sizable ESS contracts: LG and SK On have flagged ambitions to secure orders measured in tens of gigawatt-hours this year, and Samsung SDI has set a target for roughly 50 percent annual growth in ESS sales. Executives say tax advantages from the Inflation Reduction Act and surging demand for backup capacity for AI data centres and grid applications make ESS an attractive adjacent market. Several manufacturing assets formerly tied to EV joint ventures are being repurposed, or earmarked, for stationary-storage production.

That pivot addresses near-term demand but does not erase fundamental commercial differences between EV and ESS businesses. “The shift from EVs to ESS is essentially a stopgap measure. Even with fast growth in energy storage demand, it is not expected to generate the scale and volume like the EV market,” said Lee Ho-geun, an automotive engineering professor at Daeduk University.

Industry contacts and company statements point to two structural constraints. First, large ESS tend to rely increasingly on lithium iron phosphate (LFP) chemistry because of its lower cost and durability, reducing average selling prices per kilowatt-hour compared with nickel‑rich EV cells. Second, procurement for grid and data-centre projects is frequently run through competitive tenders, compressing margins as suppliers compete on price to win large installations. As one researcher at a Korean battery firm put it, “The ESS business cannot , and should not , be viewed as replacing the EV segment.” The researcher added, “Unlike EV batteries, which are sold under negotiated contracts with automakers, ESS projects go through competitive tenders. That lowest-bid dynamic makes it harder to protect margins. And since ESS systems mainly use low-margin LFP cells, winning large-scale projects leads to profitability. But larger projects also come with greater pressure to lower the price.”

For industrial decarbonisation planners and corporate procurement teams, the shift has mixed implications. Broader ESS supply in North America could ease logistics and localisation risks for large-scale storage deployments and for corporate buyers seeking to pair renewables with on-site or near-site storage. However, the prospect of narrower manufacturer margins and fiercer competition may slow investment in high-margin, innovation‑intensive cell formats that have driven advances in energy density for electrified transport.

Policy incentives remain consequential. The Inflation Reduction Act’s production and investment tax credits, and U.S. loan programmes for gigafactories, continue to lower entry barriers for ESS manufacturing. But government backing alone may not offset commercial realities if EV demand and the long-term vehicle-adoption curve remain weaker than manufacturers forecasted.

The reconfiguration of relationships between automakers and Korean cell suppliers, from joint ownership to asset transfers or standalone manufacturing, also reshapes supply-chain risk profiles. For example, SK On’s full ownership of the Tennessee plant and Ford’s control of the Kentucky sites allow each firm to redirect output toward customers or product lines of their choosing, including stationary storage. Ford has signalled plans to convert some capacity to prismatic LFP cells for non-automotive use and to repurpose battery manufacturing towards data-centre and grid applications.

Analysts caution that ESS expansion will likely coexist with, rather than substitute for, an eventual EV rebound. Korean firms are expanding LFP output and sharpening cost control to win large tenders, but achieving profit margins comparable to those previously generated by EV contracts would require either materially higher volumes or a reconfiguration of tendering practices and value capture along the project lifecycle.

For stakeholders in industrial decarbonisation, the immediate consequence is clearer supply options for storage projects in North America and more aggressive pricing competition. The longer-term picture hinges on whether ESS markets can sustain sustained, high-volume demand at prices that enable both supplier profitability and continued technology development, particularly for chemistries and pack architectures that matter to electrified transport as well as stationary applications.