Follow and read us on Google Discover
LG Energy Solution Ltd. is considering supplying the US government and major defense contractors with batteries for drones and other unmanned weapons systems, in order to take advantage of the growing demand for military material in the face of stagnant demand for electric vehicles.
The South Korean battery maker has received inquiries from several potential US partners about opportunities in the defense sector, it said. Bob Leepresident of the company for North America, in an interview.
Although talks are in their initial phase, expansion into the defense sector would represent an important strategic shift for the group. LGwhich has historically avoided this sector. Likewise, it reveals a more general trend of commercial companies towards defense, in a context in which the administration trump promotes the replenishment of ammunition used in the wars in Iran and Ukraineand strengthening national supply chains for drones and other strategic technologies.
“The defense sector is a very important source of financing and business opportunities right now, so we are receiving some inquiries,” he said. Lee. “We are being very careful in how we manage this.”
Lee compared the previous position of LG in terms of defense with that of consumer companies that decide not to enter the alcohol or tobacco market. But now, “we certainly see growth and opportunity,” he said.
The actions of LG Energy They rose 1.9% in Seoul on Wednesday, while the country’s benchmark Kospi index recorded its biggest drop this month.
This change of course occurs when LG Energy reorients its business in North America after the failure of the expected increase in the adoption of electric vehicles. Energy storage now represents the majority of its business in the United States, while batteries for electric vehicles predominate outside the country, according to Read.
The company is rapidly expanding into the energy storage market, where demand for infrastructure and data center improvements to AI is booming. It has converted five of its eight plants in the region, initially built to support electric vehicles, for the energy storage market. Lee He stated that the company expects this business to be profitable by the end of the year.
LG hosted a ceremony Tuesday to mark the opening of a battery plant in Lansing, Michigan, built in collaboration with General Motors Co.. This plant will now supply approximately US$4.3 billion worth of lithium iron phosphate cells for Megapack energy storage systems. Tesla Inc.. starting in 2027.
The plant LG in Lansing will also produce nickel battery cells for vehicles. Toyota Motor Corp.after receiving a US$1.5 billion order for another manufacturing plant LG in Holland, Michigan. The latter, in turn, will manufacture energy storage cells for the electricity company DTE Energy of Michigan.
It is expected that the annual capacity of the Lansing plant reach 35 gigawatt-hours by the end of next year.
The expansion of the manufacturing presence of LG in the United States comes amid new tensions between the US and South Korean governments over trade and security issues. The president donald trump has scaled back planned military exercises with South Korea, while praising the North Korean leader Kim Jong Un. administration officials trump They have also complained that Seoul is delaying its promise to invest $350 billion in the United States.
Still, Korean companies continue to get orders from the United States. The US Army selected a unit of Hanwha Aerospace Co. to supply the new mobile tactical gun, in a deal valued at up to $262 million that could become a larger contract to replace the Army’s aging M777 towed howitzers.
Last week, the administration trump announced tariffs of up to 100% on imported drones and their components, a move that could accelerate the decoupling of U.S. drone supply chains with China.
China is also a major competitor in the energy storage battery market. Leeof LGdeclared that he urged the Secretary of the Interior of the United States, Doug Burgumwho attended Tuesday’s event in lansingto consider measures that restrict China’s access to the energy storage market.
Lee He said he also told Burgum that USA should consider ways to reduce its dependence on other countries when it comes to batteries, similar to how leaders have worked to become less dependent on Middle Eastern oil.
“It is very important that we become more independent and self-sufficient,” he said. Lee. “He was totally on board.”
South Korean battery makers have been repurposing their factory capacity for energy storage on the power grid, after North American automakers scaled back their plans for electric vehicles and dissolved their joint ventures.
Samsung SDI Co. is acquiring the stake of G.M. in a joint venture in Indiana and converting the plant for the production of energy storage systems. SK Onthe battery division of SK Innovation Co., will operate a plant in Tennessee for the production of stationary batteries, developed through a now-defunct partnership with Ford Motor Co.
Michael Sanderssenior advisor at research firm Avicenne Energystated that there is a “very limited probability” that there will be excess capacity in the US battery market until 2035 or 2040.
“The big unknown is how long the data center boom will last,” he said. Sanders in an email. “But between demand for energy storage systems and electric vehicles, even if it loses some appeal, we don’t have to worry about an oversupply.”
