Subscribe
E-Paper
 |
| This photo provided by General Motors shows GM's all-new modular platform and battery system, Ultium, at the Design Dome on the GM Tech Center campus in Warren, Mich., Mar. 4. The company touted an exclusive new battery technology that could propel some of the vehicles as far as 400 miles (644 kilometers) on a single charge, AP-Yonhap |
By Kim Yoo-chul
As the number of coronavirus infections continues to climb upward in South Korea and other major economies, the world's top-tier battery producer LG Chem was considering holding off separating its key battery division, the company said, Monday.
"Given growing hurdles and uncertainties surrounding the company, LG Chem has decided holding off on separating the company's battery business division," an official familiar with the issue said.
While the coronavirus is impacting various aspects of its business, the company's longer-term growth opportunities would be real. It was unknown whether or not the latest decision was the result of its consultations with clients.
LG's battery business is considered the entire group's very promising next growth engine given the amount of order volumes that LG won from major global carmakers. LG Chem supplies batteries for General Motors' plug-in hybrid electric vehicle Volt, among others. It is also one of the top-tier battery suppliers for Tesla.
Considering the solid growth and market potential, LG Chem planned to create an integrated division encompassing batteries for handsets and electric vehicles to keep the momentum of its new business alive. LG Chem was also said to be going for an initial public offering (IPO) at the time of the separation as a massive fundraising campaign to sustain its battery business.
But LG Chem is still dependent on petrochemicals and the chemical industry isn't looking good on multiple fronts. The coronavirus is making an impact on the auto industry in the United States, the world's largest auto market, as the virus could cause disruptions in terms of parts supply or model production.
Also, the contagious epidemic is hurting consumer sentiment because of the uncertainty, and the speed of the outbreak will pressure major carmakers' operating profits and cash generation for "at least the first half of this year," officials contacted by The Korea Times said.
Further capacity cuts are expected as the number of infected people and affected countries grow. Car sales in China plunged 80 percent in February compared to a year earlier, the China Passenger Car Association said.
Meanwhile, Moody's lowered its global car sales forecasts for this year as the virus spreads. The rating agency said worldwide vehicle sales will fall 2.5 percent this year, more than its previous prediction of a 0.9 percent decline. The expected decline is on-top of a 4.6 percent drop in global car sales last year, year-on-year.
Regarding any updates over its battery supply chain strategy, the LG Chem spokesman said it will produce batteries for electric vehicles as scheduled and planned to defy concerns of how fragile the supply chain is for electric vehicles.
