LG Energy Solution Eyes Data Center Energy Demand Amid Slowing EV Growth

According to a Bloomberg report, South Korean battery maker LG Energy Solution is tapping into surging demand for energy storage systems (ESS) driven by artificial intelligence (AI) data centers to offset the impact of cooling global electric vehicle demand.

Image source: LG Energy Solution

Following the announcement of its operating loss for the fourth quarter of 2025, LG Energy Solution stated that it has secured battery orders from six humanoid robot developers, further diversifying its revenue streams. According to financial statements, LG Energy Solution's operating loss for the fourth quarter of 2025 was KRW 122 billion (approximately USD 84 million), consistent with preliminary figures released earlier this month.

LG Energy Solution Chief Financial Officer Lee Chang-sil stated during a conference call following the earnings announcement on January 29th that due to the cancellation of the US electric vehicle tax credit policy and the scaling back of electrification plans by US automakers, the demand for electric vehicles in the United States is likely to remain sluggish until next year. However, the growth momentum of the energy storage system (ESS) business is continuously strengthening, with global ESS demand expected to surge by 40% this year, following a 22% growth in 2025.

Lee Chang Sil revealed that LG Energy Solution will convert more electric vehicle production lines to increase its global energy storage system (ESS) battery cell capacity from 36GWh to over 60GWh, aiming to secure at least 90GWh of related orders in total this year.

Kim Min Soo, head of LG Energy Solution's energy storage planning and management division, stated that the company has established a new team responsible for overseeing and ensuring the stable operation of the entire energy storage system process in North America. North America is currently the primary source of energy storage demand, with the rapid expansion of artificial intelligence data centers being the core driver of this demand surge.

Lee Yeon Hee, head of LG Energy Solution's new energy strategy, said that in addition to cooperating with robotics companies, LG Energy Solution is also exploring other battery application scenarios such as ships and urban air mobility. The company has received orders for cylindrical batteries for humanoid robots from six global industry leaders, completed sample delivery of next-generation products, and is currently negotiating mass production timing.

Lee Chang Sil stated, "We possess a product portfolio with high safety, high energy density, and high output power. Whether it's the US, Korean, or Chinese market, we have become the preferred partner for customers in each market."

LG Energy Solution is also developing solid-state batteries, aiming to commercialize a new type of solid-state battery specifically for humanoid robots by 2030.

In the electric vehicle battery sector, LG Energy Solution will begin mass production of lithium iron phosphate (LFP) batteries and high-voltage mid-nickel batteries in the first quarter of this year, targeting the mid-to-low-end market. The company also plans to begin production of its new 46-series cylindrical batteries at its new Arizona factory in the U.S. before the end of this year. These batteries are specifically designed to improve fast charging performance. Additionally, the company will expand production capacity for hybrid vehicle batteries, where demand remains relatively strong.

On January 29, LG Energy Solution's stock price on the Seoul stock market once fell by 4.9%, narrowing its cumulative gain this year to 12%.

The slowdown in the US and European electric vehicle markets is posing increasingly severe challenges for South Korean battery manufacturers. Ford Motor Company last month canceled a 9.6 trillion won battery partnership agreement with LG Energy Solution and also terminated its joint venture with SK Innovation Co.'s battery subsidiary in the United States due to scaling back its EV operations. Freudenberg Battery Power Systems GmbH of Germany also canceled a 3.9 trillion won contract with LG Energy Solution as it exited the battery business.

To improve operational efficiency, LG Energy Solution is selling production facilities and other assets related to its joint venture battery plant with Honda Motor Co. in Ohio, USA, to Honda. Lee Chang Sil stated that LG Energy Solution will cut capital expenditures by 40% this year and maintain capital expenditure reductions of "20% to 30%" in the coming years.