1. Announcement of LFP Battery Production Line Construction in Korea
LG Energy Solution announced on Monday its plan to begin mass production of lithium iron phosphate (LFP) batteries for energy storage systems (ESS) in Korea by 2027. This marks the world’s second-largest battery manufacturer’s first domestic production of LFP batteries in Korea, a move widely regarded by industry insiders as a crucial strategic deployment to seek new breakthroughs amid intense competition with Chinese rivals and domestic Korean competitors.
The company stated it will begin constructing new production lines at its Ochang Energy Plant in North Chungcheong Province by the end of this year, with full operation expected in 2027. The initial production capacity is set at 1 gigawatt-hour (GWh), with plans to gradually expand based on market demand.
“Ochang Energy Plant serves as the ‘mother factory’ for all product development and manufacturing at LG Energy Solution,” said Kim Hyung-sik, head of the company’s ESS Battery Division, during Monday’s ceremony. “Producing LFP batteries for ESS here marks the starting point for a greater leap forward in Korea’s ESS industrial ecosystem.”
2. Global LFP ESS Battery Deployment and Market Position
LG Energy Solution is currently the only non-Chinese company with an established mass production system for LFP batteries used in ESS. The company began producing LFP batteries at its Nanjing plant in China in 2024 and added a production line at its Michigan plant in the United States in June of this year. As of the end of the third quarter, the company has secured a cumulative order backlog approaching 120 gigawatt-hours, primarily from North American and European markets.
Notably, LG Energy Solution secured a 5.9 trillion won (approximately $4.3 billion) overseas LFP battery supply contract in July this year, with a delivery period from August 2027 to July 2030. Market watchers speculate the client may be Tesla, as the US electric vehicle maker indicated during its first-quarter earnings call that it was seeking LFP battery suppliers outside of China to address US import tariffs.
LFP batteries are becoming increasingly important in the global energy storage market. Currently, more than 90 percent of the global ESS market relies on LFP technology. Compared to nickel-cobalt-manganese (NCM) batteries, LFP batteries offer stronger cost competitiveness and lower risks of ignition and fire, making them the preferred technology for large-scale energy storage applications.
3. Facing Fierce Competition in Korea’s Domestic Market
LG Energy Solution’s decision to produce LFP batteries domestically in Korea is largely aimed at enhancing its competitiveness in government-led ESS project bidding in Korea. The Korean government is promoting the development of the energy storage industry, with policy incentives increasingly rewarding local production.
The timing of this strategy is particularly significant. The Korea Power Exchange is currently conducting the second round of bidding for ESS construction projects, with a total capacity of 540 megawatt-hours scheduled for completion by the end of 2027—coinciding with the launch of LG Energy Solution’s LFP production line. In the new bidding round, non-price factors such as local industry contribution will carry more weight, rising from 40 percent to 50 percent in the evaluation, making domestic LFP production capacity even more valuable.
However, LG Energy Solution faces fierce competition from Samsung SDI in the domestic market. In the first round of government bidding in July this year, despite LG Energy Solution’s global ESS track record and 120 gigawatt-hour order backlog, the company secured only 24 percent of total capacity, while Samsung SDI swept the remaining 76 percent with its nickel-cobalt-aluminum (NCA) batteries.
Samsung SDI’s success in the first bidding round was partly due to its domestic NCA production at its Ulsan plant in South Chungcheong Province, combined with a lower bid price and strong local supply chain support. The company also showcased its latest thermal safety technology, including third-generation ESS safety enhancement technology—enhanced direct injection technology—which can rapidly spray fire extinguishing agents through pipes connected to ESS battery modules after a battery cell catches fire, effectively preventing heat spread to neighboring battery cells.
4. LFP Strategies of Korea’s Top Three Battery Manufacturers
Facing the rapid development of the global energy storage market and pressure from Chinese competitors, Korea’s top three battery manufacturers—LG Energy Solution, Samsung SDI, and SK On—are all accelerating LFP battery development.
Samsung SDI announced as early as 2023 that it would build Korea’s first LFP battery production line in Ulsan, with plans to begin mass production of its new LFP battery product, SBB 2.0, in the first half of 2026. According to reports from February this year, Samsung SDI may begin large-scale production of LFP batteries for energy storage systems by the end of this year, ahead of the initially planned 2026 timeline. The company’s LFP battery cells from the Ulsan plant will be shipped to its battery pack assembly facility in Michigan, supplying grid operators and other customers across North America.
SK On is also actively preparing, planning to begin producing LFP battery cells for energy storage systems in North America as early as this year. The company previously showcased its first LFP battery prototype for electric vehicles at the InterBattery exhibition in March 2023.
5. Korean Government’s Industry Support Policies
The Korean government is vigorously supporting the development of the domestic energy storage industry. In October 2023, the Korean government unveiled the “Korean Energy Storage Systems (ESS) Industry Development Strategy,” with the core focus on implementing a flexible power system built on energy storage technology. The government has also identified secondary batteries as one of its 12 national strategic technologies, recognizing their critical role in the country’s future industrial competitiveness.
According to the “2030 Secondary Battery Industry (K-Battery) Development Strategy,” the government and private sector plan to inject over 350 billion won into developing technologies for nickel-cobalt-manganese (NCM) batteries, lithium iron phosphate (LFP) batteries, and energy storage systems. The goal is to expand Korea’s ESS exports fivefold by 2030 and achieve a 40 percent share of the global secondary battery market.
More ambitiously, according to Korea’s “10th Basic Plan for Electricity Supply and Demand,” the government aims to capture over 30 percent of the global ESS market by 2036. To achieve this goal, the government estimates that approximately 46 trillion won will be needed by 2036 to install the necessary energy storage systems to compensate for the inflexibility of renewable energy.
6. Industrial Synergy and Supply Chain Localization
“We expect this to advance Korea’s ESS industry by leveraging synergy among domestic technology, a Korean supply chain and participation in the public sector,” a company representative said. “By carrying out LFP battery production, assembly and testing at domestic plants, we will share mass production technology and expertise, contribute to industrial and economic development and enhance the reliability of long-duration ESS operations.”
Lee Bok-won, economic vice governor of North Chungcheong Province, stated: “The production of LFP batteries for ESS for the first time domestically at the Ochang Energy Plant will serve as a catalyst for leading the development of Korea’s ESS industry. This has laid the foundation for further strengthening the international competitiveness of Korea’s battery industry and establishing North Chungcheong Province as a global center for the secondary battery industry.”
LG Energy Solution plans to transplant the mass production systems and know-how from overseas plants directly to the Ochang Energy Plant to develop the domestic ESS industry ecosystem. Additionally, the company aims to shift LFP materials, which are currently dependent on global supply chains, to domestic production through cooperation with North Chungcheong Province and domestic materials, parts, and equipment partner companies.
The Ochang plant, located approximately 130 kilometers south of Seoul, opened in 2004 and initially produced batteries for electric two-wheelers and laptops but has been mainly manufacturing electric vehicle batteries since 2011. The plant operates a production line for its flagship 2170 cylindrical batteries, which are supplied to Tesla. The facility is also connected to parent company LG Chem’s cathode material factory, demonstrating its vertical integration capability for batteries and raw materials.
This strategic move highlights LG Energy Solution’s adaptability and forward-thinking approach in the competitive landscape of the global energy storage market. By establishing LFP production capacity in Korea, the company can not only better participate in domestic government project bidding but also build a more comprehensive localized supply chain, laying a solid foundation for long-term development.
