LG Energy Posts Unexpected Loss as EV Demand Slows
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Battery maker LG Energy Solution Ltd. reported an unexpected loss — sending its shares down — as cooling demand for electric cars hurt sales.
The South Korean company reported a 225.5 billion won ($154 million) operating loss for the three months ended Dec. 31, according to preliminary results released Jan. 9. That compared to analyst estimates for a 16.4 billion won profit, according to data compiled by Bloomberg. Sales dropped 19% from a year earlier to 6.45 trillion won.
LG Energy shares fell as much as 4% in Seoul after the earnings were released, the biggest decline on an intraday basis since Dec. 20.
General Motors Co., a major customer of LG, is shutting down its self-driving vehicle business Cruise, months after it scaled-back its EV production goals. In Europe, automakers are battling weak demand for EVs due to higher living costs and the removal of subsidies in some countries. BMW AG and Mercedes-Benz Group AG are shuffling their leadership teams on rising competition with China and weak sales for EVs.
U.S. carmakers appear to have adjusted their inventory of EVs and slashed orders for batteries, Park Jin-soo, an analyst at Seoul-based Shinyoung Securities Co. said in a Jan. 7 note. In particular, battery demand from GM would be lower than expected, said Minwoo Ju, an analyst at NH Investment & Securities Co.
Battery pack prices fell 20% in 2024 due to significant overcapacity, according to BloombergNEF. Battery manufacturers offered very low prices to beat competition and gain market share, BNEF said.
LG held a 11.2% share of the global EV battery market in the third quarter, while China’s Contemporary Amperex Technology Co. Ltd. and BYD Co. held about 52% between them, according to SNE Research. Chinese firms are increasing their presence as their iron-based LFP cells replace nickel-based NCM batteries, which LG has a specialty in, SNE said.
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South Korean battery makers, which plan to invest at least $54 billion in the U.S., are worried about incoming President Donald Trump’s plan to wind back EV initiatives. They also see persistent geopolitical risks amid the U.S.-China tech war, after the Asian country announced tougher scrutiny over exports of battery technology, which may disrupt global EV supply chains.
LG Energy faces “a very challenging business environment” this year, CEO Kim Dong-Myung said in his New Year statement, adding the EV industry will rebound after 2026.
The company will release final earnings on Jan. 24.
