Battery maker LG Energy’s profit sinks on global EV slowdown

BATTERY maker LG Energy Solution’s second-quarter profit missed analyst estimates, as sales of electric vehicles (EVs) continued to slow.

Operating profit for three months ended Jun 30 dropped 58 per cent from a year earlier to 195.3 billion won (S$191 million), the Seoul-based company said Monday. That was lower than estimates of 282 billion won, according to data compiled by Bloomberg. Excluding a tax credit from the US Inflation Reduction Act, LG made a 252.5 billion won operating loss. Revenue dropped 30 per cent to 6.2 trillion won.

The report was preliminary and LG Energy will announce final results later this month. LG Energy shares fell as much as 1.4 per cent after the results were released, and recently were little changed.  

The supplier to automakers including Tesla and General Motors has been struggling with slowing sales of EVs and a drop in lithium prices tied to its selling prices. Carmakers also pressured battery makers to supply cheaper cells in order to lower EV prices as high interest rates hurt demand. At the same time, LG Energy has been losing its share in the global EV battery market due to the growth of Chinese rivals.

Tesla’s share of the global EV market dropped to 11.1 per cent this year through the end of May, compared to 14.8 per cent last year, according to SNE Research, as the carmaker’s older lineup struggles to keep up with fresher offerings from competitors. In Europe, companies including Volkswagen, Stellantis and Mercedes-Benz Group are scaling back or refocusing battery projects.

“The price of batteries for EVs slumped by almost US$50 per kilowatt-hour from its high to around US$100,” said Dongjin Kang, an analyst at Hyundai Motor Securities in Seoul. “It means the battery cost fell nearly by US$4,000 for GM’s electric SUV Equinox. There’s no reason for carmakers to purchase batteries at the moment, they are still waiting for the price to fall further in the second half.” BLOOMBERG