Energy storage system (ESS) batteries are increasingly being treated as strategic infrastructure, a framing that could keep trade barriers and industrial-policy support in force even as passenger EV demand cools. A recent industry note from Hanwha Securities points to a policy backdrop in which Washington is expected to continue using existing tariff authorities to encourage domestic capacity and “friendly” supply chains.
Demand signals remain mixed. U.S. battery-electric vehicle (BEV) sales data for January indicate a sharper slowdown than many forecasts had assumed, reinforcing a near-term earnings headwind for EV-focused battery volumes. At the same time, the market’s expectations for major battery makers already reflect weaker EV battery revenue assumptions, limiting the incremental surprise from soft sales prints.
Where the momentum is clearer is ESS. The same note highlights ESS as the most visible offset to EV cyclicality, supported by accelerating renewable integration and the growing need for on-site and grid-scale backup power, including demand linked to data centers. The report’s base case is that ESS shipments and revenue expansion can outpace the EV slowdown and become the sector’s primary growth driver through 2026.
Global installation trends reinforce that thesis. The report cites sharply higher worldwide ESS additions and a strong cumulative growth profile, led by China and Europe, while the U.S. shows more month-to-month volatility even as full-year totals continue to rise. The same dataset is used to argue that storage is shifting from a “nice-to-have” to a system-level requirement in power markets.
Raw-material dynamics add a second layer of complexity. The report flags upstream policy and quota changes in key producing regions as a potential tightening factor, while also noting recent month-on-month swings across major metals and battery inputs—conditions that can widen cost dispersion between firms depending on procurement strategy and contract structure.
