Seoul, December 2025 — Mercedes-Benz, Renault, GM, Hyundai... a blizzard of battery orders from global automakers is landing at the doorsteps of Korea's three battery giants. These orders share one critical commonality: a demand for Lithium Iron Phosphate (LFP) batteries.
Early December 2025 witnessed a flurry of activity from Korean battery makers: LG Energy Solution signed a 2.06 trillion won battery supply deal with Mercedes-Benz; SK On is in talks with Geely to establish a joint venture for LFP battery production; and Samsung SDI secured a roughly 3 trillion won energy storage system (ESS) battery order from Tesla.
This market scramble, ignited by the rise of LFP, is no longer merely a price war. It has evolved into a comprehensive contest encompassing technological roadmap choices, global capacity deployment, and supply chain restructuring.
From January to October 2025, LFP batteries accounted for a commanding 81.3% of China's power battery installations, while the share of ternary (NCM/NCA) batteries shrank to 18.6%. This trend has now spread globally.
As early as June 2021, LFP battery installations historically surpassed ternary batteries for the first time, signaling its rise as the mainstream technology. Facing this technological tide, Korean firms, originally focused on ternary batteries, have been forced to pivot.
Since late 2021, LG Energy Solution and SK On have successively invested in LFP R&D. LG has already signed a long-term supply agreement for 260,000 tonnes of LFP cathode material with China's Lithium Source to actively address its technological gap.
The Korean battery trio is seeking breakthroughs in the LFP track through major orders, technological transformation, and cross-border partnerships.
Recent Major Orders & Partnerships of Korean Battery Firms:
| Company | Partner/Client | Key Deal | Technology |
|---|---|---|---|
| LG Energy Solution | Mercedes-Benz | Signed 2.06 trillion won supply deal (2028-2035) | LFP planned for entry-level models |
| LG Energy Solution | Renault Group | LFP battery supply order (2025-2030) | LFP |
| SK On | Geely Auto | Discussing JV for prismatic LFP production | LFP |
| SK On | US-based Flatiron Energy | Supply up to 7.2 GWh ESS batteries (2026-2030) | LFP-based ESS |
| Samsung SDI | Tesla | Supply over 3 trillion won worth of ESS batteries (next 3 years) | ESS (incl. LFP) |
Behind these deals lie two core strategic moves: promoting localised production and accelerating the technology shift.
On localisation, Korean firms are adopting an "in-region, for-region" strategy. LG's US ESS battery production line capacity will expand to 50 GWh annually, with 80% slated for local production and sales. SK On's talks with Geely include potentially converting its existing plant in Komárom, Hungary, into a JV production base, revitalising 17.5 GWh of idle capacity.
Korean battery makers are actively opening a second front. With soaring power demand from AI data centers, the energy storage market is becoming a crucial new growth engine.
An LG Energy Solution executive explained: "This business pivot is a strategic move to proactively address the surge in energy storage demand, primarily driven by renewable energy expansion, grid stabilization, and growth in AI data centers."
Microsoft CEO Satya Nadella, in a joint interview with OpenAI CEO Sam Altman, highlighted that the industry's "biggest problem is not a lack of compute, it's a lack of power."
Huatai Securities estimates suggest the US could add 6-13 GW of new AI data center power demand annually from 2025-2026. By end-2026, the cumulative power gap in the US grid could reach 18-27 GW.
The three Korean battery majors are rapidly shifting focus to ESS, planning to double their total US annual capacity from about 300 GWh currently to 600 GWh by the end of 2026.
Despite aggressive moves into the LFP space, Korean firms face significant hurdles.
The technology and mass-production gap is the primary challenge. Chinese battery leaders have years of accumulated experience in LFP technology and application. Korean firms only began concerted efforts around 2024, putting their mass-production timelines several years behind.
Data from SNE Research shows that from January to November 2025, the combined global market share of LG, SK On, and Samsung SDI in the power battery market was 37.6%, down 6.3 percentage points year-on-year.
Cost control is another major hurdle. In markets like Europe, Korean firms still struggle to bridge the approximately 20% cell cost gap with Chinese competitors in the short term.
The global power battery industry is evolving from a landscape dominated by China toward a multi-polar competitive arena.
While Korean battery firms have established a preliminary framework for catching up, significant gaps in new technology maturity, capacity ramp-up, and cost competitiveness with Chinese leaders remain.
SNE Research forecasts the global ESS market will grow sixfold from 185 GWh in 2023 to 1,232 GWh by 2035.
This technological competition is, at its core, a result of market choice. LFP is not the most advanced technology, but it is currently the optimal solution based on the market's balance of performance, cost, and safety.
In labs in Seoul, engineers are racing to develop LFP batteries with higher energy density. On factory floors in Hungary, idle production lines are being retooled for LFP. At ESS project sites in the US, battery systems from Korean brands are being installed in the growing number of AI data centers.
Korean battery companies are visibly adjusting course, redirecting their technological and production strengths from ternary batteries toward the LFP track. Each move—LG recruiting a core team from former Jiewei Power in China, Samsung supplying ESS batteries to Tesla, SK On negotiating with Geely—is a precise response to shifting market dynamics.
When Mercedes-Benz decided to adopt LFP batteries for its entry-level models, this once-deemed "outdated" technology definitively rewrote the rules of competition in the global power battery market.