LG Energy Solution Ochang Energy Plant / Courtesy of LG Energy Solution
LG Energy Solution (LGES), Korea's leading battery maker, said Tuesday its third-quarter operating profit fell 39 percent from a year earlier amid slowing sales of electric vehicles.
Operating profit for the three months ended in September is estimated to have plunged to 448.3 billion won ($332 million) from 731.2 billion won in the same period of last year, LGES said in a statement.
LEGS sees the global EV markets are in a stagnation phase, known as the "chasm," which is occurring before the widespread adoption of EVs.
To ride out the "temporary" EV chasm, the company said it will expand its non-EV businesses, such as energy storage systems (ESS), and develop next-generation battery technology, including all-solid-state and dry electrode processes.
LGES said it will change some of the battery production lines in its global plants for the production of ESS, whose demand is on the rise.
In North America, LGES currently operates three battery cell plants — the first and second plants under a joint venture (JV) with General Motors, and one in Holland, Michigan. Plants under JVs with GM, Hyundai Motor Group, Honda Motor and Stellantis N.V. are being constructed in the U.S. states of Michigan, Georgia and Ohio, as well as Ontario, Canada, respectively.
In other regions, the company has plants in Korea, Poland and China, with a plant set to start production in Indonesia in the second half of 2024.
LGES said it aims to more than double sales by 2028 from 33.75 trillion won in 2023 through the business diversification and continued investments in future battery technology.
In addition to next-generation batteries, the company will also supply lithium iron phosphate (LFP) pouch-type batteries to meet a growing demand from carmakers.
An LFP battery is known for its enhanced safety features and low manufacturing costs despite a low energy density and relatively short driving range compared with lithium-ion batteries and nickel cobalt manganese (NCM) batteries adopted by Korean companies.
An all-solid-state battery is a next-generation battery solution with a filling of solid electrolyte that helps reduce fire risks and enhance the driving range of EVs.
LGES won a five-year deal to supply LFP batteries with a capacity of 39 gigawatt-hours (GWh) that can power 590,000 EVs, for Renault S.A.'s EVs in July.
On Tuesday, it obtained a large-scale deal to supply high-end batteries with a capacity of 50.5 GWh to Mercedes-Benz's affiliates for 10 years through 2038. The company didn't provide the value of the contract.
Sales are projected to fall 16 percent to 6.88 trillion won in the third quarter from 8.77 trillion won a year ago.
The company's final third-quarter earnings results are set to be released on Oct. 28.
On Tuesday, LGES shares jumped 3.9 percent to 436,500 won, far outperforming the broader Korea Composite Stock Price Index's 0.6 percent loss. (Yonhap)