As with most industries treated favorably in the Inflation Reduction Act (IRA) of 2022, the domestic energy storage market was awash with new factory announcements. Companies like KORE Power, American Battery Factory and Pomega broke ground on gigawatt-scale production facilities throughout the United States, but nothing was ever built. They quickly realized it was expensive to build brand-new factories in a market wary of future federal support of renewable energy.
LG Energy Solution in Michigan
But that’s not to say the domestic manufacturing market for lithium-based ESS is nonexistent in 2026; it’s just being led by another clean energy product: electric vehicles.
The two operational lithium-iron phosphate (LFP) cell manufacturers today — LG Energy Solution in Michigan and AESC in Tennessee — had been making batteries for American EVs for over a decade before retooling existing lines to produce ESS batteries in 2025. Two more operational EV battery plants — SK Battery America in Commerce, Georgia, and Samsung SDI in Kokomo, Indiana — also intend to begin ESS battery production in 2026. Ford also plans to swap EV manufacturing for stationary storage.
The strategic pivot by the manufacturers is also influenced by the IRA and its successor, the One Big Beautiful Bill Act (OBBBA). The OBBBA removed incentives for EV owners while leaving intact IRA credits available to ESS installers and manufacturers. Suddenly, with waning EV demand and underutilized lines, domestic EV battery manufacturers had to make up revenue elsewhere. Now, they’re stationary battery suppliers.
This manufacturing swap is actually more beneficial to the U.S. ESS market than waiting for new names to come online in their own time. Where KORE Power, American Battery Factory and Pomega were only capable of supporting sub-5-GWh annual capacities, the EV battery makers are already set up for over 15-GWh outputs. That means more domestic batteries are available to U.S. project developers today when the grid needs them most.
LG Energy Solution in Michigan.
It’s not as simple as a flip of a switch for EV battery manufacturers, though. EVs typically use lithium batteries made with nickel, manganese and cobalt (NMC), while stationary ESS benefit from the LFP chemistry. If the form factor is the same (prismatic vs. cylindrical vs. pouch cells), updating NMC lines to LFP should ideally take less than 12 months, said Anjali Joshi, market intelligence analyst at Intertek CEA.
“If the form factor is the same, converting NCM to LFP cell production line takes several months to a year,” she said.
As with solar panel manufacturing, the cell is the most important part of the ESS. If battery energy storage systems use domestically made cells, they can more easily access the ITC under foreign entity of concern restrictions introduced by the OBBBA. Wood Mackenzie and the American Clean Power Association (ACP) expected the United States to install 49 GWh of storage across all markets in 2025, an amount that can easily be met by the four established domestic lithium cell manufacturers in 2026.
“Energy storage is being quickly deployed to strengthen our grid as demand for power surges and is helping to drive down energy prices for American families and businesses,” said Noah Roberts, ACP VP of energy storage. “Despite regulatory uncertainty, the drivers for energy storage are strong and the industry is on track to produce enough grid batteries in American factories to supply 100% of domestic demand. Energy storage will be essential to the expansion of the U.S. power grid and American energy production.”
Joshi with Intertek CEA also feels confident in America’s lithium battery makers’ ability to meet domestic demand for ESS.
“Based on announced capacity, the U.S. is likely to have around a 10% FEOC-compliant capacity surplus in 2026, with Korean suppliers accounting for over 80% of the FEOC-compliant ESS cell capacity,” she said. “However, these figures assume 100% factory utilization, while Korean EV battery plants have historically run at 70-80%. So, the actual surplus will depend on how quickly Korean suppliers can fully ramp up their capacity.”
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