THE global slowdown in electric vehicle (EV) sales has hit LG Energy Solution, with the Korean battery maker’s third-quarter profit falling almost 40 per cent.
Operating profit for three months ended Sep 30 was 448.3 billion won (S$433 million), according to preliminary results released on Tuesday (Oct 8). While that was higher than analyst estimates of 428.5 billion won, it was down 39 per cent from a year earlier, according to data compiled by Bloomberg.
Excluding tax credits from the US Inflation Reduction Act (IRA), LG made a 17.7 billion won operating loss. Revenue dropped 16.4 per cent to 6.9 trillion won.
To reduce its reliance on the EV market, LG Energy said on Monday it plans to more than double sales by 2028 by expanding businesses such as energy storage systems.
The supplier to carmakers including Tesla and General Motors (GM) has been facing challenges from declining EV sales and lower lithium prices, which are tied to its selling prices. Automakers have also pressured battery suppliers to reduce cell costs in an effort to lower EV prices as high interest rates dampen demand.
LG Energy said it will announce the final results on Oct 28. The stock rose 27 per cent during the third quarter, snapping five straight quarterly declines. LG Energy was up 3.8 per cent in Seoul trading on Tuesday following the release of its preliminary results.
There’s an increased possibility of reduced deliveries to Ultium Cells, a joint venture between LG and GM, as well as tax credits from the IRA, Lee Yongwook, an analyst at Hanwha Investment & Securities, wrote in a note dated Oct 4. GM’s cumulative EV sales this year reached just over 70,000, falling short of its annual production target of all EVs with its Ultium battery packs.
“There is limited scope for meaningful earnings recovery for LG Energy Solution for the rest of this year,” Lee said. “However, growth expectations for 2025 still remain valid, driven by new EV models and regulatory changes from the US and Europe.” BLOOMBERG
