LG Energy posts unexpected loss as EV demand slows; shares drop

BATTERY maker LG Energy Solution 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 (S$211.7 million) operating loss for the three months ended Dec 31, according to preliminary results released on Thursday (Jan 9). That compared to analyst estimates for a 16.4 billion won profit, according to data compiled by Bloomberg. Sales dropped 19 per cent from a year earlier to 6.5 trillion won.

LG Energy shares fell as much as 4 per cent in Seoul after the earnings were released, the biggest decline on an intraday basis since Dec 20.

General Motors, a major customer of LG, is shutting down its self-driving vehicle business Cruise, months after it scaled-back its electric vehicle (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 and Mercedes-Benz Group are shuffling their leadership teams on rising competition with China and weak sales for EVs.

US carmakers appear to have adjusted their inventory of EVs and slashed orders for batteries, Park Jin-soo, an analyst at Seoul-based Shinyoung Securities 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.

Battery pack prices fell 20 per cent in 2024 due to significant overcapacity, according to BloombergNEF (BNEF). Battery manufacturers offered very low prices to beat competition and gain market share, BNEF said.

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LG held a 11.2 per cent share of the global EV battery market in the third quarter, while China’s Contemporary Amperex Technology and BYD held about 52 per cent 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 speciality in, SNE said.

South Korean battery makers, which plan to invest at least US$54 billion in the US, are worried about incoming president Donald Trump’s plan to wind back EV initiatives. They also see persistent geopolitical risks amid the US-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, chief executive officer 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. BLOOMBERG