The electric vehicle (EV) industry in the United States stands at a pivotal moment. What once seemed like a rapid and inevitable shift from internal combustion engine (ICE) vehicles to battery-powered alternatives has become a more complicated and uneven transition. A few years ago, automakers predicted EVs could account for 50 percent – or even 100 percent – of new-vehicle sales by the early 2030s. While we’re still bullish on the mass adoption of electrification, not just in personal transportation but also the energy storage systems and other industries, those initial forecasts face a reality shaped by economic, technological, political, and social hurdles.
Economic Headwinds
Government policy has played a major role in the EV sector’s growth – and its recent turbulence. Subsidies, emissions targets, and infrastructure investments in recent years have spurred significant momentum. However, the new administration has re-evaluated EV tax credits while easing emissions standards and renewing support for fossil fuels.
Adding to the disruption are proposed 25 percent tariffs on vehicles, batteries, and components imported from Canada and Mexico, two crucial parts of the North American EV supply chain which has been optimized for more than 30 years. The potential for tariffs to upend established supply networks has led many manufacturers to delay or reconsider investments. This turbulence threatens not only EV growth but also the broader automotive sector, which depends on global sourcing and long-term planning.
While we are fully committed to U.S. battery cell manufacturing and onshoring as much of the supply chain as possible, there are still crucial elements of our supply chain that we source from abroad. Most artificial graphite is still processed in China – not because this is a difficult technology to master, but given that this is a low-tech, energy-intensive process that makes more sense to do in a country that has lower, government-subsidized energy costs.
It wouldn’t be impossible to onshore this process, but we’d first have to explore broader conversations as an industry and country about what elements of manufacturing are the most strategic, high-value, and worthy of bringing into our communities.
An Ebb in EV Adoption
At the consumer level, EV adoption is proving slower and more complex than early forecasts suggested. High upfront costs, persistent range anxiety, inconsistent public charging infrastructure, and general consumer skepticism continue to act as barriers. Some industry analysts describe the slowdown as a natural, temporary “ebb,” common in technological transitions. Still, without major shifts in technology, infrastructure, and policy, achieving earlier market share projections looks increasingly unrealistic.
Until we help enable more affordable EV choices for customers, the industry will have to adjust to expectations and strategies to match the market’s more gradual pace.
Amid the instability, LG Energy Solution continues to be a key player. We’ve invested heavily across North America, with eight battery plants either completed or underway, including joint ventures with major global automakers such as General Motors, Honda, Hyundai, and Stellantis. We also have three wholly-owned cell-makings plants in Holland and Lansing, Michigan, along with Queen Creek, Arizona.
Despite our presence in the industry, we still face the same headwinds as the broader market: rising material costs, supply chain disruptions, and uncertain demand. Building massive battery capacity is a bet on sustained EV growth – a bet that, while logical in the long run, carries substantial short- and medium-term risks.
Addressing Core EV Challenges
Mass EV adoption will require more than a steady battery supply and affordable vehicle choices that meet customers’ range requirements. Critical technological and infrastructure challenges must be solved. Industry studies point to several areas for development, including:
- Building a reliable, extensive fast-charging network;
- Standardizing battery sizes and vehicle interfaces;
- Improving battery energy density, lifespan and charging speeds; and
- Commercializing more affordable batteries
We, like other industry leaders, continue to invest in R&D to improve battery chemistry and formulas that balance cost and energy density. We’re also interested in helping expand charging infrastructure, where compatibility and reliability issues remain hurdles for EV drivers.
However, scaling public charging infrastructure, especially in rural and underserved areas, requires significant investment that private companies alone cannot deliver. Federal, state, and local governments play essential roles in filling these infrastructure gaps.
The Affordability Gap
Affordability remains another major barrier to EV adoption. Although the price gap has narrowed – ICE vehicles averaged about $48,000 in 2024 compared with $56,000 for EVs – the difference remains significant for many consumers. Federal tax credits and automaker discounts have helped, but with incentives under political scrutiny, affordability concerns could deepen.
Part of this is on us as an industry to give customers a good reason to embrace EVs. Faster, cheaper, better products always win in the marketplace. We’ve achieved two of these elements with EVs, and you could realistically argue that China, with its more mature and developed EV market, is already there. I believe that as we make EVs more affordable – think $30,000/300-mile range vehicles – mass adoption will inevitably follow.
Tariffs add further pressure. If imposed broadly, tariffs on critical minerals, battery components, and finished vehicles could raise costs at a time when lower prices are essential to broader EV adoption. While automakers and suppliers develop contingency plans to manage supply disruptions, there is no substitute for a stable, cooperative trade environment when it comes to building a resilient EV ecosystem.
Long-Term Outlook
Despite current challenges, the long-term outlook for EVs remains strong. Governments globally continue pushing for cleaner transportation, consumers are becoming more comfortable with EVs, and technological advancements are steadily improving battery performance and reducing costs.
Still, the path forward will likely be slower and more uneven than early projections suggested. In fact, some smaller or less diversified players may struggle or exit the market. Industry consolidation among battery makers, automakers, and suppliers seems increasingly likely.
As the battery cell and related industries consolidate in the next few years, LG Energy Solution is in an advantageous position as an established company with mature technology, a high and consistent production yield rate, and more than 70,000 battery-related patents across the spectrum of different chemistries, form factors, and other technology. We plan to ride out the current storm, and we’re actually seeing more interest from potential OEM partners who appreciate that we’re a safe long-term bet.
LG Energy Solution’s investments position it to navigate volatility and competition. However, success will depend not just on existing scale but on continuous innovation, cost control, partnerships, and political flexibility.
Shaping the Future of Mobility
Beyond battery production, LG Energy Solution is exploring broader opportunities in the future of urban mobility. In Detroit, for example, the company has supported early discussions about creating EV-exclusive zones that could serve as test beds for new urban transportation models. While these ideas are still in development, they illustrate the increasingly complex ecosystem that EV suppliers must engage with – one that includes cities, utilities, tech firms, and real estate developers.
Still, real transformation will require broad collaboration. Transforming urban areas into EV-friendly environments demands regulatory changes, infrastructure investments, consumer education, and cross-sector coordination on an unprecedented scale.
When it comes to capital-intensive industries like batteries and complex technology that offers long-term but perhaps not immediate payoffs, some government support is helpful to spur adoption and seed investment and growth. Make no mistake, we do not believe that subsidies like the 30D and 45X credits from the IRA are a long-term solution, but they have both played an essential role in getting this vital, strategic industry established in the U.S.
It’s also important to note that LG Energy Solution was investing in U.S. battery production long before the advent of the IRA, and we will continue to do so, even in a changing political environment as we believe in the long-term prospects of the technology in this market.
The Road Ahead
The EV transition is not a straight path; It is a complex evolution filled with fits and starts, shaped by shifting political winds, economic uncertainties, and technological hurdles. We are helping to drive this transformation, but the industry’s success will depend on efforts far beyond those of any single company.
With careful planning, public-private cooperation and a willingness to adapt to changing realities, the vision of a sustainable, electrified future remains within reach. The question is not whether the transition will happen – but how quickly, how smoothly, and who will still be standing when it does.
Robert Lee is President of LG Energy Solution North America.