LG Energy Solution Ltd. is considering supplying the US government and major defense contractors with batteries for drones and other unmanned weapons systems to capture growing demand for military hardware as demand from electric vehicles sputters. The South Korean battery maker has received inquiries from multiple potential American partners about defense opportunities, Bob Lee, the company's president for North America, said in an interview.
Although discussions are in their early stages, expanding into defense would mark a significant strategic shift for the LG group, which has historically avoided the sector. It also highlights a broader move into defense by commercial companies as the Trump administration pushes to replenish munitions used in the Iran and Ukraine wars, and strengthen domestic supply chains for drones and other strategic technologies.
“Defense is a very big source of funding and business opportunities right now, so we are getting some inquiries,” Lee said. “We're being very careful in terms of how we manage that.”
Lee likened LG's past stance on defense to consumer companies deciding not to get into alcohol or tobacco. But now, “we definitely see growth and opportunities,” he said.
LG Energy shares rose 1.9% in Seoul on Wednesday, while the nation's benchmark Kospi index fell the most this month.
The pivot comes as LG Energy reorients its business in North America after an expected jump in EV adoption failed to materialize. Energy storage is now the majority of its US business, while EV batteries dominate outside the US, Lee said.
The company is quickly expanding in the energy storage market where demand for infrastructure upgrades and from AI data centers is surging. It has repurposed five of its eight plants in the region initially built to support EVs for the energy storage market. Lee said the company expects that business to be profitable by the end of the year.
LG on Tuesday hosted a ceremony to mark the opening of a Lansing, Michigan, battery plant built through a partnership with General Motors Co. The site will now supply about $4.3 billion worth of lithium-iron-phosphate cells for Tesla Inc.'s Megapack energy storage systems starting in 2027.
LG's Lansing plant will also produce nickel-based battery cells for Toyota Motor Corp. vehicles, after transferring a $1.5 billion order from another LG plant in Holland, Michigan. That site in turn will manufacture energy storage cells for Michigan utility DTE Energy.
The Lansing plant's annual capacity is expected to reach 35 gigawatt-hours by the end of next year.
LG's expansion of its US manufacturing footprint comes amid new tensions between the US and South Korean governments over trade and security. President Donald Trump has scaled back military exercises planned with South Korea while praising North Korean leader Kim Jong Un. Trump administration officials have also complained that Seoul is slow-walking a pledge to invest $350 billion into the US.
Still, Korean companies continue to win orders from America, with the US Army selecting a unit of Hanwha Aerospace Co. to provide the new Mobile Tactical Cannon, in a deal worth up to $262 million that could eventually turn into a larger contract to replace the Army's aging M777 towed howitzers.
The Trump administration last week announced tariffs of as much as 100% on imported drones and their components, a move that could speed a US decoupling of drone supply chains from China.
China is also a major competitor in energy storage batteries. LG's Lee said he raised the issue of China's access to the US energy storage market — which faces fewer policy restrictions than the EV market — with US Interior Secretary Doug Burgum, who attended Tuesday's event in Lansing. Using Chinese batteries for energy storage merits further scrutiny because it's a “national security issue,” he said in the interview.
Lee said he also told Burgum that the US should consider ways to reduce dependence on other countries for batteries, much in the way leaders have worked to become less reliant on the Middle East for oil.
“It's very important for us to become more independent and be self-reliant,” Lee said. “He was very much on board.”
South Korea's battery makers have been repurposing factory capacity for grid storage after North American carmakers dialed back EV plans and unwound joint ventures.
Samsung SDI Co. is acquiring GM's stake in an Indiana venture and converting the facility for energy storage production. SK On, the battery unit of SK Innovation Co., will operate a Tennessee plant for stationary battery output that it had developed through a now-defunct partnership with Ford Motor Co.
Michael Sanders, senior adviser at research firm Avicenne Energy, said there is “very limited chance” of excess capacity in the US battery market through 2035 or 2040.
“The big question is how long the data center hype will live on,” Sanders said in an email. “But between ESS and EV demand, even if it loses a little luster we don't need to worry about oversupply.”
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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