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LGES, which supplies Tesla, General Motors and Hyundai Motor among others, has been grappling with weaker EV battery demand, with one of its major customers, GM, idling a Detroit EV plant until April .
GM is one of its major customers and recently temporarily idled a Detroit plant
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NextStar’s South Korean parent company flags 1st quarter operating loss on weak EV demand
South Korean battery maker LG Energy Solution (LGES) said on Tuesday it expects to post a first-quarter operating loss of 208 billion won (approximately $192 million CDN), as weaker demand from electric vehicles (EVs) makers weighed on earnings.
That compared with an LSEG SmartEstimate forecast of a 160 billion won loss, which was weighted toward analysts who are more consistently accurate.
Here are some details:
- Revenue would likely fall 2.5 per cent to 6.6 trillion won from a year earlier, LGES said.
- The quarterly earnings guidance includes tax credits provided under the U.S. Inflation Reduction Act for the company’s battery production in the United States, LGES said in a regulatory filing. Excluding the credits, LGES would have posted an operating loss of 398 billion won.
- In February, LGES said it aims to triple its ESS revenue this year from a year earlier. Nomura estimated the company’s ESS revenue at about 2.8 trillion won in 2025.
- Analysts also said a U.S. House bill, the CHARGE Act, introduced last month to ban imports of certain Chinese-made energy storage systems, could create opportunities for South Korean battery makers. The bill cite concerns that energy storage systems manufactured in China and imported to the United States may include remote monitoring capabilities.
LGES is the parent company for NextStar Energy in Windsor, Ont. The massive battery cell factory was initially built to serve the electric vehicle battery market, however, that focus has shifted to energy storage systems because of a slumping EV market. The plant is flexible to produce batteries for both sectors moving forward.
The provincial and federal government have pledged up to $16 billion in subsidies to NextStar. It was originally a joint venture between automaker Stellantis and LG Energy Solution.
LGES is set to report detailed earnings on April 30.
With files from Heekyong Yang and CBC News
