Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Canceled EV battery orders push Korean firms to double down on ESS
LG Energy Solution's energy storage systems (ESS) for grids in California / Courtesy of LGES
By Park Jae-hyuk
LG, Samsung, SK reinforce ESS teams in year-end reshuffles
Repeated cancellations of supply deals with North American electric vehicle (EV) companies have rattled the Korean battery industry, prompting cell makers to shift their focus to energy storage systems (ESS).
With recent year-end reshuffles all strengthening ESS teams, expectations are growing that LG Energy Solution (LGES), Samsung SDI and SK On will ramp up efforts to secure ESS experts at home and abroad.
On Monday, battery materials maker L&F said the value of its high-nickel cathode material supply deal signed in February 2023 with a North American EV company, later revealed as Tesla, was slashed from $2.9 billion to $7,386 due to changes in the global EV market and battery supply conditions.
The de facto cancellation followed the termination on Dec. 17 of a 9.3 trillion won ($6.4 billion) battery supply contract signed in October 2024 between LGES and Ford Motor. LGES also disclosed on Dec. 26 that a 3.9 trillion won module supply deal with Freudenberg Battery Power Systems, signed in April 2024 for the EV battery business of the U.S. firm’s parent, Freudenberg E-Power Systems, had been canceled.
“These developments signal that the weaker competitiveness of latecomers in the EV market will keep leading to cancellations of supply contracts,” Samsung Securities analyst Cho Hyun-ryul said.
In response to the tougher business environment, Korean battery firms have sought to offset EV-sector losses with gains in the ESS market, which has grown rapidly on soaring demand for data centers to power artificial intelligence (AI).
LGES recently incorporated its energy-as-a-service (EaaS) division into its ESS business division. The battery maker also merged its three manufacturing departments, which had separately handled EV batteries, small batteries and ESS batteries, in an apparent bid to focus more on ESS.
Samsung SDI reassigned employees developing EV batteries to its ESS team and recruited experienced staff to design ESS cooling systems and ESS enclosures. In the United States, the company also brought on renewable energy specialist David Lopez as ESS sales director.
SK On created new departments overseeing ESS operations and sales, adding them to its existing ESS units, which have been under the direct supervision of the CEO since 2024. SK Battery America, the company’s U.S. operation, recently posted a job opening for a director to lead ESS applications and engineering.
All three battery manufacturers have also converted some of their EV battery production lines to make ESS batteries.
“Investor sentiment toward rechargeable battery companies will inevitably worsen in the short term, but after this series of bad news on EV batteries, investors are highly likely to turn their attention to the segment tied to ESS for AI data centers,” Yuanta Securities analyst Lee An-na said.
Still, some forecasts suggest the ESS market may not grow fast enough to fully offset Korean battery makers’ losses in EVs.
“Korean cell makers will stay sluggish in 2026,” Korea Investment & Securities analyst Choi Moon-sun said. “Growth in demand for ESS batteries could slow.”
The U.S. Energy Information Administration estimates that 19.6 gigawatts of utility-scale battery storage capacity will be added to the U.S. grid in 2025, up 50.4 percent from 11.3 gigawatts in 2024. But the projection for 2026 is just 23.7 gigawatts, indicating slower growth.