LG Energy Solution’s Projection: A Decelerating Global EV Market
In a recent announcement, South Korean battery manufacturer LG Energy Solution (LGES) disclosed its projection of a sluggish growth trajectory for the global electric vehicle (EV) market in the current year. This foresight signals forthcoming challenges amid escalating competition from Chinese counterparts.
Financial Overview: Q4 Operating Profit
LGES, a key supplier for industry giants such as Tesla, General Motors, and Volkswagen, reported an operating profit of 338 billion won ($252 million) for the October-December period. Although this figure aligns with the company’s forecast, it exceeds the estimate of 298 billion won compiled by LSEG SmartEstimate, showcasing the company’s resilience.
However, the fourth-quarter profit witnessed a significant drop, more than half of the previous quarter, attributed to weakened demand for electric vehicles in Europe.
Factors Influencing Slowdown
LGES attributed the anticipated slowdown to a combination of original equipment manufacturers’ (OEMs’) conservative inventory control and the continued decline in metal prices. The term OEM here refers to automakers, emphasizing their role in shaping the trajectory of the EV battery market.
Risks and Uncertainties in 2023
LGES identified several risk factors for the upcoming year, including the dynamic pace of EV transition plans by automakers, heightened competition in Europe, and political uncertainties such as the U.S. presidential election.
This outlook from LG Energy Solution aligns with the cautionary note sounded by its prominent customer, Tesla, which recently warned of a sharp deceleration in sales growth for the current year. The confluence of these factors poses challenges and uncertainties for the EV market in the coming months.