South Korean battery major LG Energy Solution has reported a 40% drop in third-quarter profits, resulting from slowing demand for battery cars.
The figure that the company reported, at about $323 million, was higher than analysts had forecast, but it was 40% lower than the profit figure for the third quarter of 2023.
“Competition in the global EV market is seen intensifying as macroeconomic uncertainties and geopolitical risks persist at a time when Chinese manufacturers are increasing their exports and our customers are announcing their plans for battery internalization,” LG Energy’s chief financial officer said during a conference call on the third-quarter results, as quoted by Bloomberg.
“The result of the US presidential election will also have a significant impact on the market, so it’s very difficult to provide an outlook for next year,” Lee Chang Sil also said.
The chief financial officer of the company still provided a gleam into the near future during the conference call. “Looking ahead to 2025, we see continuing macro uncertainty and geopolitical risk, increased battery exports by Chinese rivals, as well as (automaker) customer plans to manufacture their own batteries, which would intensify competition.”
Lee also said that in light of this expected industry context, LG Energy was going to substantially reduce its capital expenditure plans for 2025, leaving only “some essential and necessary investment.”
Demand for electric vehicles has been slowing down in most markets, and declining in Europe as governments began to phase out subsidies that turned out to be unsustainable. China’s dominance in that market has also pressured non-Chinese rivals, including battery developers.
At the same time, the political context in the United States is vital for the future uptake of EVs in one of the world’s largest car markets.
“The general view is that the pace of EV demand growth could be slower if Donald Trump is elected to a second term in the White House (compared with under Kamala Harris) as he has suggested cutting EV tax credits,” Hyundai Motor Securities analyst Kang Dong-jin told Reuters.
By Irina Slav for Oilprice.com
