Battery giant suffers sudden blow: 65-billion-yuan order canceled!

Facing a recent collapse in orders, LG Energy Solution swiftly initiated asset disposal and strategic adjustments. On December 24, the company announced plans to sell assets related to its L-H Battery Co. in Ohio, USA, to Honda’s U.S. subsidiary for 4.2 trillion Korean won (approximately USD 2.86 billion); the transaction is expected to close by the end of February 2026. Notably, this deal explicitly excludes land and production equipment—only factory buildings and related facilities are being sold. LG Energy Solution will continue using these facilities under a leasing agreement, leaving its production and operational plans unchanged. This 'light-asset' maneuver aims to cut construction costs—the largest component of its total investment—and alleviate financial pressure. According to company disclosures, the move forms part of its strategic response to the global EV market slowdown and uncertainty surrounding the phaseout of U.S. consumer subsidies. By converting fixed assets into leased ones, LG seeks to free up tied-up capital and improve cash flow health. A Honda spokesperson stated that the acquisition supports its long-term commitment to battery development and enhances flexibility to meet diversified battery demand. Together with the order cancellations and strategic pivot, this asset sale constitutes LG Energy Solution’s year-end 2025 'one-two punch': shifting from 'pursuing order volume' to 'focusing on profitability and cash flow health,' and concentrating resources on more predictable sectors such as energy storage systems (ESS). PART 03 All-in on Energy Storage Becomes Core Breakthrough Strategy: Dual Surge in Capacity and Orders Against the backdrop of shrinking traditional EV battery orders, ESS has become LG Energy Solution’s 'lifeline.' Since 2025, demand for ESS batteries in North America has surged dramatically. In response, the company is expanding capacity: it plans to raise its total ESS battery production capacity to 50 GWh in 2025—nearly a 60% increase over its original target of 30 GWh—with roughly 80% of that output destined for production and sales in North America. This decision rests on three pillars: Policy: U.S. Bipartisan Infrastructure Law support for energy storage, plus state-level mandates requiring storage deployment; Demand: Surging electricity consumption by AI data centers driving ESS procurement (e.g., Microsoft and Google doubled their 2025 ESS purchases year-on-year); Technology: LG’s advantages in lithium iron phosphate (LFP) battery cycle life and liquid-cooling system efficiency—giving its ESS business gross margins 5–8 percentage points higher than those of its EV battery segment. Order backlog confirms ESS’s potential. As of Q3 2025, LG Energy Solution’s backlog of undelivered ESS battery orders stood at 120 GWh, while its backlog for 46-series cylindrical batteries exceeded 300 GWh—including 107 GWh in newly signed contracts during Q3 alone. The company previously stated it would leverage standardized product lines and global manufacturing capacity to concentrate resources on ESS, aiming to make it its second-largest revenue source within three years. PART 04 Industry Consolidation Accelerates; Energy Storage Becomes Battleground for Giants LG Energy Solution’s transformation reflects three major trends reshaping the global battery industry. First, technological route divergence: Lithium iron phosphate (LFP) batteries—owing to their cost advantage (15% cheaper than NMC batteries)—have increased their market share from 38% in 2023 to 52% in 2024. LG’s prior bet on NMC chemistry caused it to miss out on Ford’s order, forcing accelerated LFP technology development. Second, regionalized supply chains are taking shape: The U.S. Inflation Reduction Act mandates local content requirements for batteries. Ford has shifted toward licensing technology from CATL, while SK On terminated its joint venture with Ford—making localized production the new norm.

LG Energy Solution’s H1 revenue reaches 14.1 trillion KRW!

In the first half of 2026, LG Energy Solution achieved consolidated revenue of 14.1 trillion Korean won, representing a 10.5% year-on-year increase. Its energy storage business, leveraging flexible scheduling across overseas production bases, responded swiftly to surging local demand—delivering a staggering 4.6-fold year-on-year revenue growth. New contract value for ESS exceeded 3 trillion KRW, contributing over 20% to total revenue. On the capacity front, Ultium Cells—a joint venture with General Motors—and L-H Battery, established jointly with Honda, have both successfully commenced mass production of ESS cells. In the electric vehicle segment, mid-to-low-priced cell products accounted for over 30% of total battery pack shipments in H1, while shipments of cylindrical batteries—including the 46-series—rose 1.5-fold year-on-year. Consequently, the company has posted three consecutive quarters of sequential shipment growth, with notable improvements in capacity utilization rates at its European and Asian plants. Regarding ESS, LG Energy Solution secured multiple key customers in 2026. In February, it signed an agreement with Qcells—the U.S. subsidiary of South Korea’s Hanwha Group—to supply 5 GWh of ESS batteries, with deliveries scheduled between 2028 and 2030; production will take place at LG’s Holland, Michigan factory. In May, LG Energy Solution inked an ESS supply agreement with DTE Energy—the largest integrated energy provider in Michigan—committing to deliver a total of 6 GWh of ESS batteries over the next two years, valued at USD 1.6 billion (approx. RMB 10.8 billion). In July, LG Energy Solution announced it will supply batteries for Google’s solar-plus-storage project—the company’s largest integrated photovoltaic-and-storage initiative. The initial phase will feature 1.6 GW of solar generation paired with approximately 2 GWh of battery storage; by 2029, the project will expand to 2.5 GW of solar and 2.9 GWh of storage capacity. Additionally, on July 3, it was reported that the battery factory operated by L-H Battery Co.—LG Energy Solution’s joint venture with Honda—began producing ESS batteries in early July. These batteries will be supplied by LG Energy Solution Vertech (LG’s North American ESS integration subsidiary) for grid-scale, commercial, industrial, and residential ESS applications across the United States. Owing to surging North American demand for ESS batteries, LG Energy Solution is ramping up ESS battery capacity in the region. It currently operates three wholly owned factories in North America, plus five jointly owned facilities with partners. Among them, the Holland, Michigan plant and the Stellantis joint venture facility in Canada are actively producing LFP batteries for ESS applications. As of end-2025, LG Energy Solution had secured over 140 GWh of cumulative ESS orders and plans to raise its ESS production capacity to at least 60 GWh by year-end 2026—including 50 GWh in North America. On the power battery front, LG Energy Solution’s global EV battery installations totaled 41 GWh from January to May 2026, reflecting only a 7.3% year-on-year increase—far below the industry average growth rate of 16.3%. Its market share declined from 9.5% a year earlier to 8.7%.

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