South Korea’s LG Energy Solution, a key electric vehicle (EV) battery supplier to General Motors and Tesla, projected a 138% increase in its quarterly operating profit on Monday, though it reported an underlying loss when excluding U.S. tax credits.
The company estimated an operating profit of 374.7 billion won ($255.2 million) for the January-March period, up from 157.3 billion won a year earlier and significantly higher than the 29 billion won forecast by LSEG SmartEstimate, which prioritizes the most accurate analysts. However, without the benefits of tax credits from the U.S. Inflation Reduction Act, LG Energy Solution said it would have posted an operating loss of 83 billion won ($56.5 million).
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The results come amid broader industry challenges. “Cooling demand for electric vehicles” contributed to the weaker performance, LG Energy Solution said in a filing. The EV sector has seen slowing growth globally as governments review subsidy programs and consumers show caution on higher-priced EV models.
In a related move, the company recently confirmed plans to acquire full ownership of its Michigan EV battery plant — previously a joint venture with General Motors — for $2 billion. The deal follows GM’s decision to pull back on its EV expansion strategy amid uncertainty surrounding U.S. policy on battery production and tax incentives.
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Earlier this year, LG Energy Solution also announced it would reduce capital expenditure by up to 30% in 2024, following an operating loss of 226 billion won in the fourth quarter of 2023 — its first quarterly loss in three years.