LG Energy to Boost Energy Storage Amid Cooling EV Demand

URGENT UPDATE: LG Energy Solution Ltd. is set to ramp up its energy storage business in the US as consumer demand for electric vehicles (EVs) cools. This strategic pivot comes just as US tax credits for EVs are set to expire on September 30, potentially hitting sales even harder.

The company’s Chief Financial Officer, Lee Chang Sil, announced this crucial shift following the release of their second-quarter earnings, which surged to an operating profit of 492.2 billion won (approximately $358 million). Revenue also reached 5.6 trillion won, aligning with earlier estimates.

“We believe that shortfalls from auto batteries can be offset by the expansion of the energy storage system (ESS) business,” Lee stated, emphasizing plans to minimize fixed costs by reallocating resources and enhancing cost efficiency. “We expect meaningful profit improvement in the second half,” he added.

This decision comes amid a challenging climate for the global EV sector. Recent reports indicate that European sales of battery-electric cars experienced their slowest growth this year, prompting automakers to call for immediate measures to stimulate demand. In the US, the looming expiration of EV tax credits is compounded by import tariffs imposed by President Donald Trump, which are squeezing manufacturers.

Notably, Tesla Inc., a key customer of LG Energy, recently reported one of its worst quarters in over a decade, with CEO Elon Musk warning of difficult times ahead. The market responded negatively to LG Energy’s announcement, with shares dropping by as much as 3.1% in early trading.

The urgency of LG Energy’s strategic expansion into energy storage is clear: as the demand for electric vehicles wanes, the company aims to leverage its ESS capabilities to maintain momentum and profitability. This pivot could signal a broader trend in the industry, where manufacturers are increasingly looking to diversify their offerings amidst shifting market dynamics.

As the situation develops, industry watchers and investors will be keenly observing LG Energy’s actions and the wider implications for the EV market. With economic conditions continuing to evolve, the coming months could prove critical for both LG Energy and the electric vehicle landscape.