Global Supply Chain Overhaul Accelerates: Korean Battery Makers Bet on Technology and Localization

Supply chain pivots to U.S. and Europe
Tech innovation drives shift beyond LFP
Experts warn recovery will take time

The global battery industry stands at a crossroads of fragmentation and reorganization. As the U.S. and Europe push for localized production and tighter regulations to reduce dependence on China, South Korea’s top three battery makers—LG Energy Solution, SK On, and Samsung SDI—are responding with a two-track strategy built on technological superiority and manufacturing efficiency. Meanwhile, in North America, market imbalances are deepening as major companies such as General Motors (GM) and Stellantis scale back or relocate planned investments. Experts agree that the industry’s trajectory will ultimately hinge on how the intersection between policy pressure and technological evolution plays out.

Localization cuts costs and minimizes tariff risks

On the 16th, tech outlet DigiTimes reported that South Korea’s three major battery makers have “moved to challenge China’s long-standing dominance in the lithium iron phosphate (LFP) battery market, which had been driven by price competitiveness and safety advantages,” adding that “China’s export control strategy is creating new opportunities for South Korea to penetrate Western markets.” The outlet assessed that the LFP segment has reached a turning point, noting that “Korean firms are avoiding the trap of low-price competition and instead pursuing breakthroughs through localization and technological differentiation.”

The first pillar of this shift is technology. Early this year, LG Energy Solution applied its self-developed cell-to-pack (CTP) technology to pouch-type LFP batteries. This advancement increases energy density by 5 percent compared to the prismatic LFP cells mainly produced in China, extending driving range. Around the same time, SK On unveiled its “Winter Pro” LFP cell, tailored for cold regions with improved low-temperature charging performance, while Samsung SDI introduced its “LFP+” battery for commercial vehicles, boosting energy density by 10 percent and enhancing thermal stability. All three companies are targeting both premium electric-vehicle markets in the U.S. and Europe and demand for energy storage systems (ESS) used in AI data centers.

These technology upgrades tie directly to localization efforts. LG Energy Solution signed a deal with Renault’s EV subsidiary Ampere to supply 39 gigawatt-hours (GWh) of LFP batteries from its Wrocław, Poland plant through 2030. It is also converting its Ultium Cells plant in Tennessee—run jointly with GM—to focus on LFP production for affordable EVs. The strategy centers on shifting production from China to the U.S. and Europe to mitigate tariff and regulatory risks while shortening joint development and certification cycles with local automakers.

Localization now extends far beyond physical plant relocation. With the EU mandating battery passports and carbon labeling, carbon emissions and recycled-material content during manufacturing have become decisive factors in contract bids. Korean firms are responding by raising renewable-energy usage at their Hungarian and Polish facilities and expanding local recycling partnerships. Building these circular ecosystems strengthens customer lock-in by integrating development, quality control, logistics, and recycling into a single value chain—achieving long-term cost reductions and sustainability advantages simultaneously.

Chinese companies are taking similar steps. CATL, for instance, is building a 100 GWh plant in Debrecen, Hungary, set to begin phased operations next year. The move aims to secure an edge in logistics and regulatory compliance by ramping up local production. Market research firm SNE Research noted that “the global battery market is entering a phase of accelerated supply-chain restructuring and regulatory tightening centered on the U.S. and Europe,” adding that “companies now require not only technological competitiveness but also supply-chain independence and regional flexibility to survive this transition.”

Investment withdrawals signal widening global divide

Across the global battery landscape, there are as many signs of retreat as expansion. One notable case is GM’s suspension of its Canadian joint venture with Brazil’s Vale. GM has temporarily halted phase-two expansion of its cathode-material plant in Bécancour, Quebec—developed with POSCO Future M—to reassess profitability and policy risk, though the first phase will proceed as planned next year.

The fallout hit Vale particularly hard. The company had invested $231 million to build a local plant to supply nickel sulfate to GM’s facility, but the project was abandoned after the expansion pause made the supply deal irrelevant. Earlier, Ford and South Korea’s EcoPro had also halted construction of their cathode plants in Quebec. The region’s early vision of a “battery valley” is now in jeopardy, threatening local economic stability.

Stellantis offers another telling example. The company decided to relocate Jeep Compass production from its Brampton, Canada plant to the U.S., affecting about 3,000 jobs. This move comes despite Ottawa’s pledge of up to $10.6 billion in subsidies for the Stellantis–LG Energy Solution joint venture. The Parliamentary Budget Office (PBO) has since recommended a comprehensive review of the $37.4 billion in EV subsidies granted in the first half of this year.

Such developments underscore the deepening polarization of the global supply chain. Capital-rich conglomerates can reallocate investments to maintain profitability, while smaller firms are hit directly by policy shifts and rising costs. Regions reliant on government subsidies face growing uncertainty in recovering invested capital, shaking industrial stability itself. As expansion and withdrawal coexist, the resilience of the global battery network increasingly depends on the resources and flexibility of each company and country.

Prolonged downturn looms amid order drought

Korea’s battery equipment sector is already feeling the pinch. As large-scale facility deliveries for the three major manufacturers conclude this year, new orders are drying up. LG Energy Solution is wrapping up equipment installations at its joint plant with Hyundai Motor in Georgia, its venture with Honda in Ohio, and its independent site in Queen Creek, Arizona. SK On is completing deliveries to BlueOval SK’s Kentucky Plant 1 and Hyundai’s joint venture, while Samsung SDI continues its 46mm cylindrical-cell transition project at its second plant in Göd, Hungary. With these projects winding down, equipment suppliers face mounting uncertainty over next year’s revenue outlook.

Investment priorities are shifting from expansion to conversion. With EV demand slowing and production utilization adjusting, cell makers are increasingly retrofitting existing lines or switching to ESS and LFP production. LG Energy Solution is converting Ultium Cells Plant 2 to an LFP line and modifying part of its Lansing facility for prismatic ESS batteries. SK On has delayed operations at its Tennessee site and postponed Kentucky Plant 2 to next year while restructuring its cost base. As expansion gives way to reconfiguration, equipment suppliers are now competing in contracts focused on material innovation and efficiency improvements rather than large-scale projects.

Still, some optimism remains. Hyundai Motor and SK On have resumed investment in their joint plant in Georgia after a one-year suspension caused by temporary demand stagnation. The restart, following LG Energy Solution’s staffing difficulties at its own Georgia facility, suggests SK On’s growing importance in the supply chain. Hyundai plans to secure 35 GWh of annual capacity at its Bartow County plant, completing one line this year and the remaining three in the first quarter of next year.

Experts agreed that the recovery of the battery industry hinges on the intersection of policy and technology. They noted that tighter U.S. and European restrictions on Chinese-made batteries could benefit South Korea’s top three producers, but if the global demand slump persists, equipment suppliers will face an inevitable drought in new orders, leading to overcapacity and worsening cash flow. “The battery industry now needs both technology and policy to work in tandem to return to a stable growth phase,” said an industry official. “Even if market demand rebounds, the gap between companies in production efficiency and supply-chain management will only widen.”