LG Energy Solutions (LGES), the leading South Korean battery maker, announced a temporary pause to construction plans for the second phase of its $5.5 billion energy storage system (ESS) manufacturing plant in Arizona. It partners with Honda, Hyundai, Toyota and many other automotive manufacturers.
Vertical construction on LGES’s cylindrical battery factory started earlier this year. It will not be affected by its decision to pause plans for its second plant, according to the company. The pause concerns the ESS battery factory.
In April, the company said it was on track to complete both plants in two years’ time, with the first round of hiring expected to begin at the end of this year.
Hyung Kim, head of the ESS battery division, said: “ESS plays a vital role in green energy infrastructure as it utilises power supply in a flexible manner. There is no better place to build the source of our sustainable energy here in Arizona, where the abundant solar energy surrounds the region. Quality batteries, made right here in the Copper State, will reach every corner of America to provide power.”
The decision to pause the construction of the ESS battery plant just a few months later indicates that the EV battery market is at a stage of over-saturation, also reflected in the delayed plans of other manufacturers.
LGES had planned to produce lithium iron phosphate (LFP) pouch-type batteries for ESS in Arizona, with an aim to start operations in 2026. “We are adjusting the pace of planned investment execution efficiently and flexibly, according to market conditions and focusing on optimising our operations. Temporarily suspending the construction of the Arizona ESS battery facility is part of such efforts,” LGES said.
When completed, the Arizona plant’s annual output capacity is expected to reach 36GWh of cylindrical batteries and 17GWh of LFP ESS batteries. The company is expected to become Queen Creek’s largest employer, creating nearly 4,000 jobs.
