US Energy Storage Sector Benefits from EV Slowdown and Increased Domestic Battery Production
Starting January 1, 2026, tariffs on Chinese batteries and battery energy storage systems (BESS) increased from approximately 37.5% to 55%. The slowdown in electric vehicle (EV) adoption is allowing battery manufacturers to repurpose production for BESS, with companies like LG Energy Solution, Samsung SDI, and SK On increasing local manufacturing and forming agreements with BESS integrators.
The repurposing of facilities is expected to create a surplus of battery cell capacity by late 2026. Although Chinese batteries remain the cheapest option, customers are increasingly willing to pay more for domestic products to avoid tariff-related uncertainties.
The situation is complicated by immigration raids affecting skilled labor at battery plants, raising concerns about training domestic workers. Despite these challenges, the trend suggests a shift toward US-based supply chains for energy storage solutions.
