LG is hedging against a more complicated US EV market
LG Energy Solution has started converting part of the production capacity at five US plants to manufacture lithium iron phosphate cells, or LFP cells, for stationary energy storage. The facilities were built primarily around the electric-vehicle battery market, but the company now sees stronger growth in grid storage than it expected a few years ago.
The announcement came from Bob Lee, LG Energy Solution’s executive vice-president and head of North America, at the Benchmark Mineral Intelligence Giga US 2026 conference in Washington, DC. According to Lee, the US EV market has expanded more slowly than expected while demand from utilities and data centres has accelerated.
That combination is forcing battery manufacturers to become more flexible. LG is not abandoning EV production, nor is it converting the five factories entirely. Instead, it wants to use part of the existing capacity for a market that is currently offering more predictable demand.
Trump’s energy policy has made EV investment less predictable
The timing matters. Since Donald Trump returned to the White House, the federal government has moved to weaken several pillars of the previous administration’s electric-vehicle policy.
In his January 2025 executive order on American energy, Trump directed federal agencies to work towards eliminating what the administration calls an “EV mandate”. The order also called for a review of policies and subsidies that, in the White House’s view, favour electric vehicles over other technologies.
For automakers and battery companies, the issue is not only whether a particular incentive survives. Large factories require billions of dollars and are designed to operate for decades. A policy that changes after one election can alter vehicle demand, factory utilisation and the financial case for local production.
LG’s decision therefore looks less like a rejection of electric cars than a hedge against political and commercial uncertainty. Storage batteries are still part of the clean-energy economy, but their business case is tied more directly to grid reliability, peak demand and data-centre growth than to consumer incentives for buying an EV.
Why LFP makes sense for grid storage
The five plants are expected to shift part of their production from high-nickel NMC chemistry to LFP. NMC cells can offer higher energy density, which is valuable when a battery must be light and compact inside a vehicle. Stationary storage has different priorities.
For a battery connected to the grid, lower cost, long cycle life and thermal stability can be more important than saving every kilogram. LFP chemistry also uses less nickel and no cobalt, which can simplify raw-material sourcing and reduce exposure to price volatility.
The conversion will require more than changing the chemistry inside the cell. Lee said LG is also developing different system-level technologies and cooling arrangements for grid-scale applications. The company is working on prismatic cells as well as its existing pouch and cylindrical formats, with the prismatic design intended for both entry-level EVs and stationary storage.
A $1.6 billion test of the new strategy
LG Energy Solution Vertech’s agreement with Michigan utility DTE Energy illustrates the scale of the opportunity. Under the $1.6 billion procurement deal, LG will supply battery systems for eight projects with a combined power rating of 1.5 GW and storage capacity of 6 GWh.
The ratio corresponds to roughly four-hour systems. In ideal conditions, the projects could deliver their full rated output for approximately four hours before the stored energy was exhausted. Actual operation will depend on how DTE dispatches the batteries and on the needs of the electricity system.
The LFP cells will be manufactured at LG’s Holland, Michigan, plant. Deliveries are scheduled over two years. Linking local cell production with projects in the same state also gives LG a way to shorten supply chains and demonstrate the value of domestic battery manufacturing.
Storage may protect US battery factories from EV politics
The American battery industry was built with the help of substantial public support, including production tax credits and incentives for domestic manufacturing. Lee said those measures helped offset the high upfront cost of building US plants. At the same time, he warned that battery projects can take ten to twenty years to pay back.
That long horizon is precisely why political consistency matters. A factory designed around growing EV sales faces a different risk profile when the federal government is questioning EV incentives, challenging emissions rules and promoting consumer choice between electric and combustion vehicles.
Grid storage cannot solve every problem for LG. It will not replace a healthy EV market, and the projects themselves also face permitting, financing and connection delays. But it gives the company another path to keep expensive US production assets busy while the direction of federal transport policy remains unclear.
The shift also sends a message to European manufacturers and battery investors. The United States remains an important location for battery production, but the market is no longer defined only by the promise of rapid EV growth. Companies must now plan for changing incentives, a more openly political energy strategy and a White House that is less supportive of electric cars than the administration before it.
Source: Best Magazine, 6 August 2026; The White House, Executive Order 14154.
Source: https://www.bestmag.co.uk/lg-energy-solution-us-plants-lfp/
