LG Energy Solutions Raises Alarm on E-Vehicle Market
Uncertain Future Despite Planned Production Boost

The future of the electric vehicle market looks bleak, at least according to South Korean battery manufacturer LG Energy Solution S (LGES). The company, which serves as a supplier for prominent car manufacturers like Tesla and General Motors (GM), expressed concerns about the sustained demand for batteries for electric vehicles. LGES cites the unstable global economic situation as the reason, which could negatively impact electric vehicle sales.
Following this announcement, the company's stock experienced a sharp drop, closing with a significant decrease of 8.7 percent, marking its lowest level in the past 15 months. The statements from LGES's CFO, Lee Chang-sil, underscore the alarming outlook: "The demand for electric vehicles might be lower next year than anticipated." The company forecasts that the revenue growth for 2024 won't match this year's figures. For the current year, LGES predicted an increase of 35 percent.
Interestingly, LGES isn't the only company concerned about the future of electric vehicles. There are worries that the demand for electric vehicles might be hampered by high interest rates and the shaky economies of major markets like China and Europe. Particularly, the increasing competition from affordable electric vehicles from China poses a challenge for European manufacturers.
However, LGES's response to these uncertain times is two-fold. While the company is taking measures to cut costs – like scaling down production in its factory in Poland – it also plans to increase the production capacity of its battery factory in Arizona. This move enables the company to benefit from tax credits offered by the U.S. for battery production.
Looking ahead, LGES also plans to start producing cheaper Lithium Iron Phosphate batteries (LFP) by 2026, allowing them to cater more flexibly to the market for more affordable electric vehicles.
Despite these uncertain times, LGES reported a rise in operational profit by a remarkable 40 percent in the last quarter, largely due to U.S. tax credits and increased battery production. This surge in profit indicates that the company is still successfully navigating the market despite challenges. It remains to be seen how the market will evolve in the upcoming months and what role LGES will play in it.
