Battery maker LG Energy Solution Ltd. has reported a significant drop in second-quarter profit, reflecting the ongoing challenges in the electric vehicle (EV) market. The Seoul-based company revealed that its operating profit for the three months ending June 30 plunged 58% from the previous year to 195.3 billion won ($141 million). This figure fell short of analysts’ estimates, which had projected an operating profit of 282 billion won, according to Bloomberg data.
The reported revenue also saw a substantial decline, falling 30% to 6.2 trillion won. Excluding the tax credit from the US Inflation Reduction Act, the company faced an operating loss of 252.5 billion won. These results are preliminary, with final figures expected to be released later this month.
LG Energy’s shares experienced volatility following the announcement, initially dropping by as much as 1.4% before stabilizing. The company, which supplies batteries to major automakers such as Tesla Inc. and General Motors Co., has been grappling with multiple challenges. Slowing EV sales, declining lithium prices, and pressure from carmakers to provide more affordable battery cells have all contributed to the company’s struggles.
The global EV market is experiencing a significant shift, with Chinese competitors gaining ground. According to SNE Research, Tesla’s share of the global EV market fell to 11.1% through the end of May, down from 14.8% last year. Meanwhile, European automakers like Volkswagen AG, Stellantis NV, and Mercedes-Benz Group AG are re-evaluating their battery projects, further impacting demand for LG Energy’s products.
Dongjin Kang, an analyst at Hyundai Motor Securities Co. in Seoul, noted the dramatic reduction in battery costs. “The price of batteries for EVs slumped by almost $50 per kilowatt-hour from its high to around $100,” Kang said. “This means the battery cost fell nearly by $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.”
For more detailed insights, read the full article on https://www.bloomberg.com/news/articles/2024-07-08/battery-maker-lg-energy-s-profit-sinks-on-global-ev-slowdown?srnd=technology-vp
