Arya News - A shift to energy storage accelerates as US carmakers retreat, but margins may not match the EV boom.
SEOUL – Korea’s leading battery-makers are reworking their North American playbooks, shifting from electric vehicle batteries to energy storage systems, as US automakers retreat from aggressive electrification targets and dissolve joint ventures.
However, with EV batteries long serving as their main profit driver, a prolonged downturn in the sector is raising concerns that the strategic shift may not be enough to sustain meaningful growth.
According to Bloomberg on Wednesday, Stellantis is exploring an exit from StarPlus Energy, its US battery joint venture with Samsung SDI, as it seeks to roll back EV investments and conserve cash after announcing more than 22 billion euros ($26.2 billion) in asset writedowns — a sharp reduction in the recorded value of key assets — last week.
Based in Kokomo, Indiana, StarPlus Energy’s first plant began operations in December 2024 as a key production hub to target the North American EV market. The second plant is under construction with a target launch for next year. Total investment in the two plants amounts to $6.3 billion.
Bloomberg reported that Stellantis is considering selling off its stake to a third party, though no final decision has been made yet.
The move would add to a broader retreat by US automakers from partnerships with Korean battery manufacturers that began last year due to a downturn in North American EV demand following the abolition of federal consumer EV subsidies in September 2025.
Last week, Stellantis sold its 49 percent stake in NextStar Energy, a joint venture with LG Energy Solution in Canada, to LG for a symbolic $100, exiting a partnership in which its stake had been valued at about 1.4 trillion won ($964 million). In the US, LG Energy Solution acquired the third Ultium Cells battery plant in Michigan from its joint venture with GM last year.
SK On dissolved its US battery joint venture with Ford Motor Co. in December last year by splitting ownership of the three BlueOval SK plants. The Korean company will assume full control of the Tennessee facility under construction, while Ford will take over the two Kentucky plants.
Against this backdrop, the three battery-makers have been accelerating their push into the rapidly growing North American energy storage systems market, largely driven by the AI data center boom and supported by tax incentives under the US Inflation Reduction Act.
During recent earnings calls, LG Energy Solution and SK On vowed to secure ESS orders totaling over 90 gigawatt-hours and 20 gigawatt-hours, respectively, this year, centered on North America. Samsung SDI aims to boost its annual ESS sales by around 50 percent on-year. The battery facilities newly acquired from their former US partners are being — or will be — mainly utilized as manufacturing bases for ESS applications.
Despite Korean battery manufacturers’ pivot to ESS, experts say the segment is unlikely to deliver profit margins that are high or structurally stable enough to replace the EV business.
Lee Ho-geun, an automotive engineering professor at Daeduk University, said, “The shift from EVs to ESS is essentially a stopgap measure. Even with fast growth in energy storage demand, it is not expected to generate the scale and volume like the EV market.”
A researcher at a Korean battery firm noted that while margins on batteries installed in large-scale ESS containers may not look dramatically different from those of EV batteries over the mid-to-long term, “The ESS business cannot — and should not — be viewed as replacing the EV segment.”
According to the researcher, ESS battery packs typically need to be priced lower per kilowatt-hour than EV batteries to remain competitive, prompting Korean manufacturers to expand the supply of low-cost lithium iron phosphate (LFP) cells for power storage systems.
“Unlike EV batteries, which are sold under negotiated contracts with automakers, ESS projects go through competitive tenders. That lowest-bid dynamic makes it harder to protect margins. And since ESS systems mainly use low-margin LFP cells, winning large-scale projects leads to profitability. But larger projects also come with greater pressure to lower the price,” the researcher added.