LG Energy Solutions has halted construction of its battery factory for energy storage systems (ESS) in Arizona just two months after breaking ground. The Korean battery manufacturer decided to decelerate its investment due to a significant slowdown in battery demand, shifting focus to existing facilities instead.
The construction of the 17 GWh/year pouch-type lithium iron phosphate (LFP) battery production plant in Queen Creek, Arizona, was initially part of a larger investment plan valued at NT$7.2 trillion. This factory was intended to bolster the company’s production capacity for ESS batteries. Despite this setback, LG Energy Solutions continues to progress with the construction of a 4680 medium and large cylindrical battery plant in the same location, which is scheduled to commence operations in 2026.
The company’s strategic pivot comes in response to a prolonged decline in electric vehicle (EV) demand, leading to lower utilization rates at its battery factories. Consequently, LG Energy Solutions plans to reduce its investment in the Arizona ESS battery plant by a third to NT$4.8 trillion. Instead, the company will retrofit some of its underutilized EV battery production lines, such as those in its 20 GWh Michigan plant, to manufacture ESS batteries. This move aims to enhance the operational efficiency of its current facilities and tap into the growing ESS market.
This decision aligns with recent industry trends, where companies are adapting to market demands and optimizing existing resources. With U.S. policies limiting Chinese battery imports, LG Energy Solutions is poised to meet the increased domestic demand for ESS batteries. This shift reflects the company’s agile approach to navigating the evolving landscape of the battery industry.
