North American Energy Storage Market in Turmoil! South Korean Battery Giants Challenge China's Dominance

Abstract:

The tariff battle between China and the US has presented new opportunities for South Korean battery companies.

 

South Korean manufacturers, repeatedly suppressed by Chinese companies in the power battery sector, seem to have recently encountered new opportunities.

 

Once dominated by ternary lithium batteries, South Korean battery giants are now fully shifting to lithium iron phosphate (LFP) technology and focusing on the booming North American energy storage market.

 

Currently, lithium iron phosphate batteries are reshaping the global power battery landscape with unstoppable momentum.

 

Leveraging their technological first-mover advantage, Chinese companies achieved a landmark achievement in January this year: six Chinese battery manufacturers simultaneously ranked among the top ten in global power battery installations, with a combined market share of 68.1%, leading South Korean companies by 51.2 percentage points.

 

Source: SNE Research

 

This is the first time since SNE's statistics that the market share gap between Chinese and South Korean companies has exceeded 50%, with South Korea's dominant ternary lithium batteries (NCM) facing strong pressure from China's LFP technology.

 

Meanwhile, slowing demand in the European and American electric vehicle markets has forced the three major South Korean battery companies—LG Energy Solution, Samsung SDI, and SK On—to seek new avenues for growth.

 

And the tariff battle between China and the US has presented new opportunities for South Korean battery companies.

 

In recent years, the North American energy storage market has shown explosive growth, with the US, as the main market in the region, experiencing rapid growth in energy storage installations.

 

According to Bloomberg New Energy Finance, the cumulative installed capacity of US energy storage systems (ESS) will increase from 19GW in 2023 to 250GW in 2035, a more than 13-fold increase, with most of it using lithium iron phosphate batteries.

 

However, in stark contrast to the surge in ESS market demand, the US has a severe shortage of domestic lithium iron phosphate battery and cathode material production capacity. The Financial Times revealed that the US energy storage market has a serious dependence on Chinese lithium iron phosphate batteries.

 

To promote supply chain "de-Chinaization", the US has set up layers of trade barriers against Chinese battery companies.

 

According to the Asia Times, the US has imposed a tariff rate of 155.9% on Chinese LFP energy storage batteries, and plans to increase it to 173.4% next year.

 

As an ally of the US, South Korea maintains close political and economic ties with the US. South Korean battery manufacturers setting up factories in the US meets the US's geopolitical strategic needs and creates an important breakthrough for South Korean companies.

 

Against this backdrop, it is generally believed that if South Korean battery manufacturers continue to stick to ternary lithium battery technology, they may repeat the mistakes of the electric vehicle sector in the ESS market.

 

To this end, South Korean companies, which originally focused on ternary lithium batteries (NCM), are starting to build up their strength to compete with Chinese companies in the lithium iron phosphate battery sector, which they dominate, and are fully preparing for a new round of competition centered on energy storage.

 

 

01

Shifting to Lithium Iron Phosphate

 

A remarkable change is taking place in the global power battery market—lithium iron phosphate (LFP) technology has established its market dominance.

 

Caption: Global Power Battery Installation by Type, Q1 2025

Source: GGII

 

According to data released by GGII, in the first quarter of 2025, the global installation share of lithium iron phosphate power batteries reached 51.5%, exceeding the installation volume of ternary lithium batteries for the first time.

 

As the world's largest producer of power batteries, China's lithium iron phosphate power battery shipments reached 372 GWh in the first half of this year, accounting for 78% of total power battery shipments, a year-on-year increase of 68%.

 

Driven by the continued growth of lithium iron phosphate power battery installations in China, the global installation volume of lithium iron phosphate power batteries increased by 63% year-on-year from January to May this year.

 

Technological breakthroughs are key to this transformation. With the continuous improvement of fast charging capabilities and cruising range, the advantages of lithium iron phosphate batteries in terms of safety and cost are becoming increasingly prominent.

 

Lithium iron phosphate batteries mainly rely on phosphorus and iron, which are not only inexpensive but also have stable supplies. Ternary lithium batteries, on the other hand, rely on nickel and cobalt, which are expensive and volatile.

 

For example, in March this year, due to the Democratic Republic of Congo's suspension of cobalt exports for four months, cobalt salt prices surged by nearly 50%.

 

At the same time, the demand of the world's leading automakers is also changing. Tesla, BMW, Audi, Rivian, and Ford are accelerating their shift to lithium iron phosphate battery technology, driving continued growth in global demand.

 

Against this backdrop, Chinese companies are leveraging their first-mover advantage in lithium iron phosphate technology to continuously expand their market share, while South Korean companies focusing on ternary lithium batteries face severe challenges.

 

SNE Research data shows that in the first five months of this year, Chinese power battery companies' global market share increased to 68.4%, with CATL leading with a 38.1% share, followed by BYD with 17.4%.

 

In contrast, the combined market share of the three major South Korean manufacturers, LG Energy Solution, Samsung SDI, and SK On, was 17.5%, down 4.5 percentage points year-on-year.

 

Source: SNE Research

 

In order to reverse this situation, South Korean companies have had to accelerate their deployment of lithium iron phosphate battery technology and simultaneously seek new growth points—attacking the US energy storage market, upgrading electric vehicle battery production lines, and expanding the supply chain to increase ESS business revenue.

 

 

02

Securing the North American Market

 

Currently, the three major South Korean battery giants—LG Energy Solution (LGES), SK On, and Samsung SDI—are accelerating their deployment of North American lithium iron phosphate energy storage battery business.

 

In June this year, LG Energy Solution announced that its Holland, Michigan plant has officially started production of lithium iron phosphate ESS batteries, marking its first mass production of lithium iron phosphate energy storage batteries in the US.

 

To this end, the company converted some of its electric vehicle battery production lines to ESS-specific lines and suspended its planned new construction in Arizona, bringing forward the mass production of ESS batteries in the US by one year, demonstrating its determination to shift to the energy storage sector.

 

In May this year, LG Energy Solution reached an agreement with General Motors (GM) to add a lithium iron phosphate battery production line at their jointly owned Ultium Cells LLC factory.

 

It is noteworthy that LG Energy Solution recently quietly announced that it had secured a three-year long-term order for lithium iron phosphate (LFP) batteries worth approximately US\$4.3 billion, effective August 1, with the option to extend for another four years.

 

Although the client's identity was not disclosed, only described as a "major North American partner." However, insiders revealed that the buyer is Tesla, and the batteries are all supplied to Tesla's energy storage systems.

 

Source: Bloomberg

 

Meanwhile, Samsung SDI is also evaluating the possibility of establishing a local ESS battery production base in the US.

 

The company pointed out that currently, ESS batteries are mainly exported to the US market and are susceptible to tariffs; therefore, it is actively negotiating with customers.

 

Recently, Samsung SDI signed a contract with NextEra Energy for approximately KRW 437.4 billion (approximately RMB 2.268 billion) for ESS supply.

 

The main product is the integrated Samsung Battery Box (SBB), which is easy to transport and install and can be plugged directly into the power grid.

 

In addition, Samsung SDI also reached a cooperation agreement similar to LG Energy Solution's with General Motors in May this year.

 

The joint venture project in New Carlisle, Indiana, with an investment of US\$3.5 billion, has confirmed that it will introduce lithium iron phosphate battery production lines in 2027.

 

To adapt to lithium iron phosphate battery production, Samsung SDI is transforming its existing nickel manganese cobalt (NMC) battery production lines, and the procurement of related raw materials and equipment has been launched simultaneously.

 

SK On signed a memorandum of understanding with L&F, a South Korean battery material manufacturer, this month regarding the supply of lithium iron phosphate materials to the North American market to ensure a stable supply of cathode materials and accelerate entry into the rapidly growing North American ESS sector.

 

Source: SKinno News

 

In September last year, SK On also signed a cooperation agreement with the US energy company IHI Terrasun Solutions to supply ESS batteries.

 

Similar to the previous two companies, SK On also plans to achieve localized production of lithium iron phosphate batteries by transforming existing production lines.

 

SK On is considering converting some of the idle production lines at its electric vehicle battery factory in Georgia, USA, into ESS LFP battery production lines to accelerate the layout of its lithium iron phosphate battery business.

 

Currently, SK On operates two battery factories in the United States, with four more under construction. After full commissioning, the annual production capacity will exceed 180 GWh.

 

 

03

China and South Korea accelerate cooperation?

 

Although South Korea has accumulated certain advantages through localization and diversification in the US, it started late in lithium iron phosphate technology and faces many pain points in entering the North American lithium iron phosphate market.

 

Chinese companies have rapidly iterated lithium iron phosphate technology and products, with excellent performance in energy density and safety, and have a high market share and recognition in the global market.

 

South Korean companies still need to invest a lot of R\&D resources and time to surpass Chinese companies in lithium iron phosphate technology.

 

In terms of the supply chain, a significant share of the world's major lithium battery materials is concentrated in Chinese companies, and the concentration is still increasing.

 

Chinese battery companies dominate the global battery and battery material supply chain, producing cathodes, anodes, etc., for the three major South Korean electric vehicle battery manufacturers: LG Energy Solution, Samsung SDI, and SK On.

 

Therefore, some industry insiders believe that the construction of South Korean companies' lithium iron phosphate production capacity is not something that can be accomplished overnight, and in the short term, they still need to rely on China's industrial chain and cooperate with Chinese companies.

 

According to statistics from Chinese customs data, in the first half of 2024, the number one export destination for Chinese lithium iron phosphate was South Korea, with a total export volume of 396.59 tons.

 

Source: Chinese Customs, Shanghai Metals Market

 

In December last year, LG Energy Solution signed a huge order with Longpan Technology, which will ship 260,000 tons of lithium iron phosphate cathode materials to LG Energy Solution before 2028, with a total value of approximately RMB 10 billion, setting a record for the "largest lithium iron phosphate order in the world" so far.

 

Since the beginning of this year, the three major South Korean battery giants have maintained cooperation with Chinese material companies. For example, LG Energy Solution and SK On have reached in-depth cooperation with Rongbai Technology and Dangsheng Technology in the fields of ternary and lithium iron phosphate cathode materials this year, respectively.

 

From customs data, South Korea still accounts for a significant share of China's lithium iron phosphate exports in the first half of this year, with an export volume of 332.42 tons. However, it is worth noting that this share has slightly decreased compared to the same period last year.

 

Source: Chinese Customs, Shanghai Metals Market

 

Samsung SDI is also increasing the proportion of procurement of battery production equipment from China. Earlier this year, a Samsung SDI official stated that Chinese equipment manufacturers have higher technical levels and lower prices than their South Korean counterparts.

 

It is understood that Chinese companies represented by Leading Intelligent and Hangke Technology have successively established subsidiaries in South Korea, and Hangke Technology has supplied the three major South Korean companies, Samsung SDI, LG Energy Solution, and SK On.

 

In the face of trade barriers, Chinese energy storage companies have also accelerated their capacity layout in the US market.

 

Companies including CATL, Envision Energy, EVE Energy, Hachen Energy Storage, Guoxuan High-tech, and Trina Solar have jointly established 11 lithium-ion battery/energy storage system integration factories in the United States.

 

It cannot be ignored that as South Korean manufacturers continue to increase their investment in North America, Chinese manufacturers will also face more intense competition.

 

In the face of various uncertainties, the most effective way to cope is to continuously improve one's own strength.