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[Alpha Biz= Reporter Kim Sangjin] LG Energy Solution has temporarily halted the construction of its Energy Storage System (ESS) battery factory in Queen Creek, Arizona, just two months after groundbreaking. This decision comes as a response to sluggish demand for batteries, prompting the company to adjust its investment pace. Instead, LG plans to convert some production lines at its existing electric vehicle battery factory in Arizona, which currently operates below capacity, for ESS purposes.

According to industry sources on July 1st, LG Energy Solution has suspended the construction of its pouch-type lithium iron phosphate (LFP) battery plant for ESS, which was initially planned to have an annual capacity of 17 GWh. However, the construction of the 4680 large cylindrical battery plant with an annual capacity of 36 GWh will proceed as scheduled, with operations expected to start in 2026. The company had previously announced plans to invest up to 7.2 trillion Korean won (approximately $6 billion) in constructing the Arizona factory, but the investment amount is now expected to be reduced to around 4.8 trillion won.

The decision reflects LG's strategic shift in response to fluctuating market demands, particularly impacted by the downturn in electric vehicle sales, such as those of the Cadillac brand. Despite the temporary halt in construction, LG Energy Solution remains committed to capturing growth opportunities in the expanding ESS market by repurposing existing facilities and meeting increased demand for ESS batteries driven by U.S. policies limiting Chinese battery imports.

 

 

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