From Tesla to Data Centers: LG’s Bold Move in LFP and Sodium Batteries

2025-11-10 | Calvin

Recently, LG's joint venture, NextStar Energy, announced that its battery factory in Canada is about to begin mass production of lithium iron phosphate (LFP) energy storage batteries, targeting commercial, industrial, and power storage solutions.

In the energy storage market, LG is also advancing sodium battery solutions. The company recently partnered with Sinopec in China to jointly develop cathode and anode materials for sodium batteries, aimed at energy storage systems and low-speed electric vehicles.

As a leading global lithium battery manufacturer, LG ranked third in installed capacity for power batteries in the first half of this year. From a technology perspective, LG has traditionally focused on ternary lithium batteries. However, due to recent battery safety concerns and increased adoption of LFP batteries by automakers and energy storage integrators, LG is accelerating the deployment of a diversified material system.

Lithium Iron Phosphate (LFP) Batteries

Regarding LFP, LG has previously converted its Michigan factory in the United States into a dedicated LFP battery production line, expected to reach a capacity of 17 GWh by the end of this year, and potentially increase to 30 GWh by the end of 2026. Notably, this factory’s output is dedicated entirely to the energy storage market.

In terms of orders, in July this year, LG signed an LFP battery supply agreement with Tesla for energy storage applications. Tesla's Megapack units from its Shanghai factory have already achieved stable shipments, and future deliveries could serve the domestic energy storage market, where only the safer LFP chemistry is allowed.

Thus, the LFP batteries supplied by LG to Tesla may eventually serve the domestic energy storage market. In September, Tesla also unveiled new large-scale storage units, the Megapack3 and Megablock. The Megapack3 has a capacity of 5 MWh, while the Megablock achieves megawatt-level output, both based on LFP chemistry.

In addition to the dedicated LFP storage battery line in the U.S., LG is reallocating part of its power battery production lines in China and Poland to produce energy storage batteries to ensure delivery.

Sodium Batteries

Regarding sodium batteries, LG has confirmed that its first-generation sodium batteries will target the UPS backup power market for data centers, defined as a replacement for lead-acid batteries, with mass production expected in 2027.

Currently, uninterruptible power supplies (UPS) still rely mainly on lead-acid batteries, but lithium and sodium batteries are expected to gradually replace them in the future.

On one hand, data centers require extremely high battery performance, especially for instantaneous start-up and high-power discharge. Sodium batteries can achieve over 90% efficiency at discharge rates above 2C, providing rapid high-power output suitable for data centers’ instantaneous start-up needs.

On the other hand, sodium batteries offer excellent high and low-temperature performance, meeting the requirements of data centers across different countries and regions worldwide.

Looking at global data center demand, China and the U.S. are advancing rapidly in AI and big data, which will drive higher future demand for power and data center backup solutions. With its early deployment in the U.S. and geopolitical advantages, LG is well-positioned to become the largest battery supplier for data center backup power in the U.S.