LG Energy Solution said demand for cylindrical batteries used in energy storage systems helped lift first-quarter revenue despite weak electric vehicle demand. The company posted 6.555 trillion won ($?) in revenue for the quarter and said it aims to raise the share of ESS sales to 35% by year’s end, up from less than 10% last year and about 25% in the first half of this year.
In a conference call on its 2026 first-quarter results on Wednesday, the company said it will use improved cost competitiveness to respond to customer demand for ESS and strengthen its mid- to long-term position.
LG Energy Solution said it is preparing a new lithium iron phosphate, or LFP, product to be unveiled in 2028, with 10% higher energy density and 15% better price competitiveness than its existing LFP batteries.
Chief Financial Officer Lee Chang-sil said the company had secured an ESS order backlog in North America of about 440 gigawatts as of late April. He said LG Energy Solution plans to secure more than 50 gigawatts of battery production capacity for ESS in North America by the end of this year.
The company also expects benefits from the OBB (One Big Beautiful) law pursued by the Trump administration. It said maintaining a 50% to 55% share of U.S.-made batteries in ESS could allow tax credits of up to 40% of investment through 2030.
Looking beyond the first quarter, Lee said North American ESS demand remains solid and demand in Europe for high-nickel batteries used in EVs and hybrid vehicles is holding up. He forecast second-quarter performance to grow about 10% from the first quarter and said revenue in the second half could rise 15% to 20% from the start of the year, supported by ESS demand.
The company said it ultimately aims to return to profitability even excluding North American production subsidies under the Inflation Reduction Act, or IRA.
Kim Min-su, who oversees ESS planning and management at LG Energy Solution, said ESS revenue growth became visible starting in the first quarter as U.S. battery production capacity expanded. He said the company has converted multiple EV production lines to ESS and will focus on stabilizing utilization and cutting costs to improve profitability.
To meet North American ESS growth, LG Energy Solution said it will sequentially start ESS production lines not only at its Michigan and Ontario plants but also at its Lansing facility and at joint ventures with Honda and General Motors. The company said the plan would secure an additional 50 gigawatts of production capacity in North America.
Kim said the North American ESS market, based on the power grid, is expected to grow about 30% annually through 2030. He added that forecasts of battery oversupply are premature given restrictions on Chinese companies entering the market and concerns about local supply shortages tied to the buildout of AI data centers.
The company said sales of its cylindrical batteries, a core product, are expected to remain steady in the second through fourth quarters, supported by rising electric two-wheeler sales in China and India. It said it is also reviewing expanded cylindrical production at its plant in Poland to meet local demand.
LG Energy Solution said its flagship 46-series products began shipping to customers from its Ochang plant late last year, and its Arizona plant could begin supplying products as early as this year. It said it has also won orders for volumes to be installed in premium products from European automakers including BMW, as it diversifies its portfolio.
The company said it is also preparing next-generation prismatic and sodium batteries. It plans mass production of prismatic batteries for ESS in North America in late 2027. For EV prismatic batteries, it said it is preparing a joint response with customers through a pilot production line at the Ochang plant.
LG Energy Solution said sodium batteries, which it described as having better performance than LFP, are expected to see demand mainly for ESS and as replacements for 12- and 24-volt lead-acid batteries. The company said it is working with multiple customers to test 12- and 24-volt sodium battery samples and plans to address the market.
LG Energy Solution reported first-quarter 2026 revenue of 6.5550 trillion won and an operating loss of 207.8 billion won. North American production subsidies reflected in the quarter totaled 189.8 billion won.
* This article has been translated by AI.
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