Expansion of energy storage cell capacity outside China: Strategic reshaping of the supply chain

With rising U.S. trade barriers against China, the global lithium battery supply chain is rapidly restructuring. Despite over 90% of U.S. reliance on Chinese cells, tariffs on Chinese energy storage products are increasing, driving companies to expand overseas capacity and build more resilient supply networks.

InfoLink provides an analysis of the regional distribution, construction progress, and expansion trends of overseas energy storage cell capacity.
 

Capacity overview: Cell overseas expansion progress

As of 1Q25, global energy storage cell capacity outside China reached 102 GWh (including some EV batteries but without specific breakdowns), with 52 GWh dedicated to energy storage.

Regionally, energy storage cell capacity is distributed across Southeast Asia, North America, Southern Europe, East Asia, and Eastern Europe. Southeast Asia leads with 40% of planned capacity, mainly driven by EVE Energy (Malaysia), LGES (joint venture in Indonesia), and REPT (Indonesia). North America ranks second, with key players including LGES, Envision, and Gotion High-Tech.
 

Emerging new sites: Indonesia and Morocco gain traction with raw material and cost advantages

Amid escalating U.S. trade sanctions and stricter rules of origin, Indonesia and Morocco have emerged as key expansion hotspots in recent years, offering the following three major advantages:

1. Labor resource: Both regions offer low-cost labor, supporting the development of large-scale manufacturing industries.

2. Raw material: Indonesia, the world's largest holder of nickel reserves, is attracting leading lithium battery companies and expanding into the LFP supply chain. Morocco, with abundant phosphate resources, is building an “LFP-focused” battery ecosystem. Both regions have developed upstream production capacity for key materials such as LFP cathodes and anodes.

3. Trade policies and tariffs: Indonesia has lower tariffs compared to Vietnam and Thailand after several rounds of tariff increases, while Morocco benefits from a Free Trade Agreement (FTA) with the U.S., offering tax incentives. This makes both countries important bases for Chinese companies to expand capacity.
    

   

Construction progress: LGES leads with a focus on low-cost, low-risk development

Looking at company plans based on energy storage cell capacity, LGES is the most aggressive in expanding overseas, with over 10 GWh of planned capacity. Previously, LGES focused on production in China, but since 2024, it has sped up expansion outside China. Over the following year, LG’s plants in Indonesia (Southeast Asia, joint venture), Michigan (North America), and Poland (Eastern Europe) are expected to start energy storage cell production.

From the perspective of construction progress, most non-China projects are currently building factories and installing equipment. Based on investment and construction timelines across regions, InfoLink expects non-China energy storage cell capacity to surge, reaching over 50 GWh per year by 2027.

 
 

Based on this round of expansion outside China, three strategic characteristics can be summarized:

1. Cost-efficient transition

Some manufacturers are leveraging or converting existing EV battery factories to build storage cell production lines, minimizing construction time and investment costs.

2. Stable investment with pilot-scale expansion

This round of expansion shows no large-scale investments yet, with companies taking a cautious approach through small-scale projects under 10 GWh.

3. Cautious U.S. expansion strategy

Despite initiating trade barriers and growth from IRA incentives, U.S. domestic energy storage cell capacity has not expanded significantly. Companies remain cautious, citing policy uncertainty, high costs, and limited upstream supply in North America. Many prefer building in lower-cost regions before supplying the U.S. market to reduce risk.
 

Cautious expansion, agile strategy following PV industry

The energy storage sector can learn from the PV industry's early experiences of expansion outside China by anticipating risks like rules of origin and geopolitical shifts. Companies are encouraged to adopt a “steady, flexible, small-step” strategy, building modular and resilient production networks tailored to market and policy needs.

For more insights into expansion strategies outside China, InfoLink’s Energy Storage Supply Chain Database offers comprehensive information. Please contact us for more information.