A single contract can change the trajectory of a company-and Samsung SDI’s latest deal is probably the clearest indication yet that, after years of predictions, the balance in the battery industry has finally begun tipping toward grid-scale energy storage. The South Korean manufacturer said its U.S. subsidiary has landed a more-than 2 trillion won ($1.36 billion) contract to supply lithium iron phosphate batteries to a major American energy infrastructure developer. Supplies will be delivered over three years from 2027, with the production lines at its U.S. plant converted to manufacture prismatic LFP cells specifically for stationary energy storage systems.
But the move epitomizes a wider strategic refocusing among Korean battery manufacturers. The sudden removal of up to $7,500 per-vehicle incentives under the U.S. federal electric vehicle tax credit has sapped incentives for car purchases and dampened demand for automotive batteries. Analysts say the likes of LG Energy Solution, SK On, and Samsung SDI are pivoting capacity towards ESS in a bid to take advantage of the storage investment tax credit, coupled with domestic content requirements. “EV demand is going to decrease because of the removal of the EV consumer tax credit. The battery manufacturing capacity from those is now being repurposed to BESS.” said one industry consultant.
Central to this agreement is Samsung SDI’s prismatic LFP technology. Unlike pouch cells, prismatic ones boast a rigid casing made of aluminum that enhances its mechanical strength and offers resistance against external impacts. The design features vents and fuses to dissipate heat in emergency situations, while in Samsung’s implementation, it also integrates proprietary No Thermal Propagation (No TP) technology. This system prevents heat propagation across cells by leveraging thermal insulation materials and predictive temperature monitoring. Batteries will be deployed within the Samsung Battery Box 2.0 – a containerized ESS solution in a 20-foot container that integrates batteries, fire safety systems, and control electronics. The company maintains the approach allows for the best fire safety, performance, and cost competitiveness for large-scale data centers and utility projects.
Manufacturing prismatic LFP cells for ESS is quite different from the production of automotive batteries. The same electrochemistry is utilized; however, the ESS cells are optimized for very long cycle life, high thermal stability, and cost efficiency instead of high energy densities and compact form factors that electric vehicles require. This means production lines have to be retooled for bigger cell formats and heavier casings, with safety features integrated in a way adapted for stationary applications. The Samsung SDI Indiana facility, operated jointly with Stellantis under the StarPlus Energy brand, was originally designed for up to 34 GWh annually. By converting part of this capacity, the company will be in a position to reuse existing infrastructure with limited capital expenditure.
The U.S. market context is key. According to the market research firm SNE, demand for ESS in the country is forecasted to grow more than twofold-from 59 GWh in 2025 to 142 GWh by 2030. More importantly, LFP chemistry is gaining traction due to its lower cost per kWh and reduced fire risk compared to nickel-cobalt-aluminum chemistries. More precisely, prismatic LFP cells enjoy increasing preference among both EV and ESS customers for their durability and safety profile. Samsung SDI is currently the only non-Chinese manufacturer of prismatic LFP batteries in the United States, which gives it an exclusive competitive advantage especially since developers seek ways to avoid FEOC dependency for qualification in federal incentives.
This transaction underlines the trend for flexibility in battery manufacturing. Facilities such as Gotion’s $2 billion Manteno plant in Illinois can flip-flop between EV and ESS production in order to meet changing market conditions. For Samsung SDI, the Indiana conversion underlines how sunk investments in gigafactories can be repurposed to meet evolving demand. Industry watchers expect BESS assembly and integration to follow cell expansions based on their generally shorter lead times and lower comparative capital intensity versus cell production.
With this contract, Samsung SDI not only secures significant revenue but also reinforces its foothold in a market segment on track to experience rapid growth. The company, in turn, announced that it is in talks with various customers from around the world for additional supply contracts for LFP and NCA ESSes, with the strategic shift to energy storage not a stopgap measure but an integral part of its long-term strategy.
