LG Energy Solutions Warns of Decline in EV Battery Demand Due to Trump Tariffs

LG Energy Solutions, a battery supplier for Tesla and General Motors, says President Trump's tariffs are slowing down EV battery demand. The company plans to boost energy storage production and convert some US EV production facilities to manufacture energy storage systems. The news comes as Trump's tariffs have had a big effect on the auto industry in the US, with major auto companies announcing billions in additional costs due to the tariffs.

President Donald Trump's tariffs are significantly impacting the electric vehicle (EV) industry, with LG Energy Solutions, a major battery supplier for Tesla Inc. (TSLA) and General Motors Co. (GM), reporting a slowdown in EV battery demand. The company's CFO, Lee Chang-sil, attributed the decline to the tariffs and the early end of EV subsidies, stating that these factors could lead to vehicle price increases and a slowdown in EV growth in North America [2].

LG Energy Solutions is planning to boost energy storage production and convert some US EV production facilities to manufacture energy storage systems to offset the reduced demand for EV batteries. This strategic shift comes amidst broader challenges in the auto industry, where major companies like Volkswagen have reported billions in additional costs due to tariffs [1].

The tariffs, along with the administration's Big Beautiful Bill law, which axed the $7,500 federal EV credit and relaxed CAFE norms, have significantly affected ZEV credit sales for EV makers like Tesla and Rivian Technologies Inc. (RIVN) [2]. Additionally, Panasonic Holdings Corp. (PCRFF) announced delays in ramping up production at its Kansas battery plant due to Tesla's sales slump [2].

The tariffs have also led to cancellations and delays in planned energy storage system (ESS) cell production facilities in the US. According to Clean Energy Associates (CEA), approximately 21GWh of planned ESS cell capacity for 2028 has been cancelled so far this year due to new tariffs and duties [3].

The impact of these tariffs is not limited to the US. The EU, despite its lower reliance on Chinese battery cells, remains appealing to investors due to lower labor costs and cheaper electricity. The EU is also seeing increased demand for storage to aid decarbonization and enhance grid flexibility [3].

In conclusion, the tariffs imposed by President Trump are having a profound impact on the EV industry, with major suppliers and manufacturers adjusting their strategies to mitigate the negative effects. The future of the industry will depend on the resolution of these trade tensions and the development of alternative supply chains.

References:
[1] https://www.newsmax.com/world/globaltalk/tariffs-donald-trump-volkswagen/2025/07/26/id/1220185/
[2] https://www.benzinga.com/markets/tech/25/07/46627485/trump-tariffs-are-causing-decline-in-ev-battery-demand-says-tesla-general-motors-supplier-lg
[3] https://www.energy-storage.news/21gwh-of-us-ess-cell-manufacturing-capacity-cancelled-this-year-clean-energy-associates-reports/