LG Energy Solution (LG ES) posted a profitable second quarter this year, attributed to investments in battery storage in the US and electric vehicle (EV) cell production in Europe paying off.
The South Korean battery manufacturer released its Q2 and first-half (H1) 2026 financial results this morning.
The company posted KRW7.6 trillion (US$4.88 billion) consolidated revenues for the quarter, up 13.3% from KRW6.55 trillion in Q1 and a 20% increase year-over-year from KRW6.06 trillion in Q2 2025.
Its energy storage system (ESS) division’s revenues soared almost fivefold year-on-year. While the EV segment could not match this level of growth, LG ES has now had three consecutive quarters of increased shipments and improved utilisation rates at its EV operations in Europe and Asia.
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LG ES does not break out EV and ESS sales in its financial results release and presentation, but the company did say that increased orders for pouch cells from EV customers in Europe and “stable demand” for cylindrical cells from a strategic EV customer, as well as BESS sales in the US drove revenue growth overall.
The company also revealed its action plan for the second half of this year, which includes “stable expansion” of ESS operations in North America and growing its backlog with orders from renewable energy and data centre customers.
LG ES also aims to make its first sample shipments of sodium batteries for energy storage customers during 2027. It will accelerate product development and initial preparation of the production line in the second half of 2026. The company said it is also prepping a pilot line based on a dry-electrode process for all-solid-state batteries.
Earlier this month, LG ES said it expected to announce an operating profit of around KRW113 billion for Q2, which, as Reuters noted in a 7 July article, was a 77% year-over-year decline from the KRW492.2 billion operating profit posted in the same period of 2025.
LG ES confirmed this morning that operating profit for the quarter stood at KRW113.3 billion with an operating profit margin of 1.5%. Operating profit margin in Q2 2025 was 8.1%.
LG ES aims to leverage US market position to win AIDC deals
The obvious big change between then and now is that federal subsidies for EV purchases were still in place in the US in the first three quarters of 2025, ending last October and removing a significant driver of demand.
As has been regularly reported by Energy-Storage.news, LG ES was among the first battery makers with production lines in the US that repurposed some of them to battery energy storage system (BESS) cell manufacturing.
BESS retained the investment tax credit (ITC) for projects and the production tax credit (PTC) for manufacturers through the budget reconciliation HR.1 bill, aka ‘One Big Beautiful Bill Act’ legislative overhaul. While the incentive programmes already included a 10% bonus adder for domestic content use, the ‘OBBBA’ also ushered in the era of foreign entity of concern (FEOC) rules, making projects that use Chinese imported battery cells ineligible for tax credits.
So, in Q1 this year, LG ES reported a KRW208 billion loss, attributed to ramp-up costs for ESS cell production lines and the slump in US EV demand.
At the time, however, the company’s leadership said its investment in five ESS cell factories in North America, to be open by the end of this year, would enable it to reach more than 50GWh of annual production capacity for the US market.
Q2 results offset that slow first quarter. LG ES claimed it has been a strong first half of 2026, reporting KRW14.1 trillion revenue for the six-month period, an increase of 10.5% year-over-year from KRW12.8 trillion in H1 2025.
“Surging demand” for energy storage drove a 4.6x increase in revenue growth for the ESS business. LG ES booked KRW3 trillion of orders in H1 2026 including AI data centre (AIDC) deals. Meanwhile, L-H Battery, its joint venture with Honda and Ultium Cells, its joint venture with General Motors, began making BESS cells in Ohio and Tennessee, respectively.
LG ES said rising power demand and investment in AI infrastructure are driving growth in both front-of-the-meter (FTM) and behind-the-meter (BTM) energy storage market segments. AIDCs have also expanded the scope of BESS applications, including backup power, UPS, and power-volatility-smoothing functions.
The company aims to leverage its position as a prohibited foreign entity (PFE)- compliant provider of BESS technology and to strengthen its product lineup for power grid and data centre applications, it said. In Q2, North American production incentives contributed KRW241 billion to its revenues, which LG ES said reflected the quarter-on-quarter increase driven by energy storage shipments.
LG ES supplies cells to BESS integrators to use in their projects, with customers that include Tesla, and also supplies cells to its own in-house system integrator subsidiary in the US, LG ES Vertech. In May, LG ES Vertech signed a 6GWh deal with Michigan utility DTE Energy.
