LG Energy Solution nearly doubles ESS market share, eyes return to profit in Q2

LG Energy Solution has nearly doubled its share of the global energy storage system (ESS) battery market this year compared to last year, cementing its presence as demand rapidly expands in North America and Europe. With large-scale orders set to ship in the second half of the year — backed by local production — expectations are growing for a meaningful earnings recovery.

LG Energy Solution's lithium-ion ESS shipments surged 253 percent year-on-year in the first quarter, according to SNE Research, an energy-focused market research firm. Total ESS market shipments reached 195.5 gigawatt-hours (GWh) in the same period, up 78 percent. By outpacing overall market growth, LG Energy Solution lifted its market share from 1.4 percent in the first quarter of last year to 2.7 percent in the first quarter of this year — roughly double.

The company has been rapidly converting electric vehicle battery production lines to ESS output to meet demand in non-Chinese markets. First-quarter shipments to North America and Europe reached 32.7 GWh and 29.5 GWh, respectively, up 83 percent and 107 percent year-on-year. China's market posted steady growth of 52 percent, but its share of global ESS shipments fell below 50 percent.

Among South Korea's three major battery makers, LG Energy Solution has moved most aggressively into lithium iron phosphate (LFP) battery production for ESS applications. The company has already established large-scale production at its factory in Holland, Michigan, and began its first shipments this year from its plant in Wroclaw, Poland.

Large-scale order fulfillment is set to accelerate in the second half, which is expected to drive further earnings improvement. Last month, LG Energy Solution signed a 6 GWh ESS supply contract with US utility DTE Energy, with deliveries beginning this year.

Industry analysts expect LG Energy Solution to return to operating profit in the second quarter. The consensus operating profit estimate for Q2 stands at 215.6 billion won ($139 million), according to financial data provider FnGuide, which would mark the company's first profitable quarter in two quarters. In the first quarter, LG Energy Solution posted sales of 6.555 trillion won and an operating loss of 207.8 billion won.

The company is also moving quickly to scale up its ESS business. LG Energy Solution has set an ESS order target for this year of at least 90 GWh — matching last year's order volume — and plans to expand production capacity to more than 60 GWh by year-end. Over the medium to long term, the company aims to raise the combined share of ESS and new businesses to around 40 percent of total sales.

"The power demand landscape is changing rapidly, opening new growth opportunities," LG Energy Solution President Kim Dong-myung said at a recent earnings call. "In North America, we are converting EV assets to ESS to meet demand for non-Chinese, locally produced LFP batteries in the supply chain."

Some analysts also expect tariff refunds to bolster profitability. The refunds stem from a February ruling by the US Supreme Court that invalidated tariff measures imposed by the Trump administration. LG Energy Solution filed for approximately 300 billion won in refunds in April, of which around 100 billion won has been returned so far.