GM pivots Tennessee battery plant to tap energy storage boom

Ultium Cells LLC, the battery joint venture between General Motors Co. and LG Energy Solution, will start making cells for stationary energy storage at its Tennessee plant next month as it seeks to restart factories idled by GM’s EV retrenchment.

Ultium will rehire about 700 workers who were temporarily laid off in January at its Spring Hill, Tennessee, facility to start production of lithium iron phosphate, or LFP cells, which it will supply to LG to sell to grid and data center customers, Tom Gallagher, vice president of operations for Ultium, said in an interview. The plant, which first opened in 2024, previously made nickel-based cells for the Cadillac Lyriq and Vistiq and Honda’s Acura ZDX SUVs, and was set to employ as many as 1,350 before it paused production.

“We’re able to transition this capacity to a new business opportunity in rapid short order,” Gallagher said. “That’s a tangible difference with other JVs.”

Retooling the facility to make LFP cells is costing Ultium “tens of millions” of dollars, and laid off workers should be called back by the end of April, he said.

General Motors and many of its peers are trying to stem billions in losses on electric vehicles by pivoting their JV plants from automotive to stationary storage batteries, or divesting from them altogether. While President Donald Trump’s regulatory rollback and elimination of crucial EV tax credits weakened an already slowing US EV market, electricity demand is projected to rise 12% by 2030, with demand from data centers accounting for more than a third of that increase, according to BloombergNEF.

Broader Pivot

For LG, converting the Tennessee plant is part of a broader pivot that’s critical to the company’s growth. While it still plans to make automotive batteries for GM, adding flexibility will keep its lines busy even if EV demand remains low. The South Korean battery maker is retooling four other EV battery plants in North America, including two in Michigan, its Ohio JV with Honda Motor Co., and one in Windsor, Canada, formerly a JV with Stellantis NV, to make LFP cells for stationary storage systems. Its other Ultium JV plant in Ohio will continue making EV cells for GM; a new plant in Arizona will also start making EV batteries this year.

The cost of retooling a plant for LFP cells varies, but is usually 10% to 20% of the original investment cost, since only some equipment has to be tweaked, said Bob Lee, LG Energy Solution’s president for North America.

The US market is a crucial source of growth for LG because, unlike Europe, the US has put up regulatory roadblocks to restrict Chinese rivals from future expansion, said UBS analyst Tim Bush.

“This is the bright spot” in terms of revenue and profit growth, Bush said, because “access to the tax credit for storage developers is predicated on phasing China out almost entirely from the supply chain.”

Including the 45X battery production tax credit and the 48e investment tax credit, both of which were preserved in Trump’s budget law, LG and its energy storage system, or ESS, customers, could benefit from federal subsidies that cover about 60% of the cost of an energy storage system, usually $225-$250 per kilowatt-hour, according to UBS.

Hunger for Electricity

Even if the AI-driven boom in data center construction slows, there will still be enough electricity demand to utilize LG’s existing capacity in North America, said Tristan Doherty, Chief Product Officer at Vertech, LG’s systems integration unit for stationary storage.

“Having these facilities that are able to be converted in less than a year means that we can react and we can actually get up to capacity,” Doherty said in an interview at LG’s new factory in Windsor, which started churning out LFP cells in November. “We’re going to be supplying the majority of the US market with domestic cells.”

Korean manufacturers in aggregate could go from having less than 10% of US utility market share in 2025, to more than 50% by 2027, UBS forecasts.

For GM, the shift to ESS is temporary. The value in Ultium converting the plant to making ESS cells is that it gets the furloughed workers back on the job and keeps the plant viable for vehicle battery production, said GM spokesman Stu Fowle.

In the future, GM plans to use manganese-rich LMR batteries, with LG as the producer. The two companies are betting LMR can compete with LFP on cost and offer better performance. It has not yet named a US site. Spring Hill is capable of producing them.

—With assistance from Mark Chediak.