Korea's three major battery makers plan to offset declining earnings from slowing electric vehicle demand by expanding into energy storage system (ESS) batteries. Each company is converting EV battery production lines for ESS use. Orders are flowing in, particularly from North America, where power demand is surging due to AI data center expansion and renewable energy growth. Robot batteries are also emerging as a promising future revenue source for the industry.
Samsung SDI announced on the 16th that its US subsidiary, Samsung SDI America, signed an ESS battery supply contract with a major local energy company. The company will supply ternary NCA (nickel-cobalt-aluminum) and LFP (lithium-iron-phosphate) batteries in phases.
The contract is valued at approximately 1.5 trillion won ($1.05 billion). Batteries will be produced at StarPlus Energy, a joint venture with Stellantis located in Indiana. The facility was originally built to manufacture EV batteries but has partially converted production lines for ESS in response to changing market demand. Deliveries will occur in stages from this year through 2029, spanning four years.
Samsung SDI currently produces the only non-Chinese prismatic ESS batteries in North America. Late last year, the company also signed a 2 trillion won LFP battery supply contract with a US energy infrastructure development and operations firm.
Among the three battery makers, LG Energy Solution entered the ESS market earliest. In July last year, the company signed an LFP battery supply contract worth approximately 5.94 trillion won, with Tesla believed to be the customer. LG Energy Solution also signed contracts estimated at 1.4 trillion won with Hanwha Qcells and 4 trillion won with EG4 Electronics, a US residential ESS specialist.
Late entrant SK On entered the market in September last year by signing its first ESS battery supply contract with US renewable energy firm Flatiron Energy Development.
The three battery makers plan to convert 20-30% of their total domestic and overseas production capacity to ESS use. The ESS market boom is also reviving Korean battery materials companies after a prolonged downturn. POSCO Future M announced on the same day that it signed a long-term synthetic graphite anode material supply contract worth approximately 1.01 trillion won with a global automaker. The five-year contract runs from 2027 to 2032, with Tesla believed to be the customer.
The anode materials will reportedly be used for both ESS and automotive applications. This represents POSCO Future M's largest contract since entering the anode material business in 2011. A company spokesperson explained, "This is part of a package deal with the 670 billion won natural graphite anode material supply contract signed in October last year."
L&F signed a memorandum of understanding with SK On last year for LFP cathode material supply for North American ESS applications. Enchem also previously signed a 1.5 trillion won LFP electrolyte supply contract for ESS with China's CATL.
Recently, the spread of physical AI is creating tailwinds for the battery industry. Starting with Tesla's Optimus, scheduled for mass production in the second half of this year, humanoid robots are entering full commercialization, which is expected to drive robot battery demand. All three major battery makers currently supply batteries to various robots in pilot operation.
