Korea's LGES sees battery market uncertainties in 2025

Market: Battery materials, Metals
29/10/24

Top South Korean battery manufacturer LG Energy Solution's (LGES) July-September revenue dipped on the year but rose on the quarter. It did not provide a clear 2025 battery market forecast, citing uncertainties.

LGES expects the battery market to be increasingly competitive, citing key customers'internalisation of battery production and higher Chinese battery exports. But it held back from making a forecast for 2025, citing macroeconomic uncertainties and geopolitical risks, while adding that the results of the impending US election will have an "important impact" on the direction of the electric vehicle (EV) market.

Its revenue fell by 16pc on the year to almost 6.9 trillion won ($4.98bn) given this year's EV market slowdown. But revenue rose by 12pc on the quarter owing to its energy storage system (ESS) segment, expanded sales to European original equipment manufacturers, and higher production from its joint ventures in North America and Indonesia, according to its latest quarterly results. Its operating profit dipped by 39pc on the year to W448bn, which includes W466bn from US' Inflation Reduction Act tax credits, without which it would have recorded a W18bn operating loss.

The firm expects significant cuts in capital expenditure during 2025, stating that it is monitoring and reviewing the situation of its investments "line by line". LGES earlier this year decided to slow its EV battery expansion in the US, as it is now looking to be more "efficient" in its US investments, including exploring converting EV battery production capacity to ESS.

LGES is also considering converting its EV battery production lines in Europe to meet ESS demand in the region, it said, despite previously securing 109GWh of future orders that will be produced out of its Wroclaw plant in Poland for US carmaker Ford's electric commercial vehicles in Europe. The firm in October said it plans to reduce its dependence on the EV battery business.

The pivot comes despite the utilisation rate at its Poland plant rising given a gradual recovery in EV battery demand from Europe's automakers, which LGES expects to continue in October-December. But it sees limited upside to the utilisation rate of its plants in North America and China, citing inventory adjustments from its key customers.

By Joseph Ho

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