South Korean battery firm LG Energy Solution (LGES) warned on Wednesday of slowing revenue growth in 2024 due to global economic uncertainties affecting the outlook for electric vehicle (EV) sales, causing its shares to drop nearly 7%. This caution aligns with sentiments from a growing number of automakers and suppliers who are concerned that high interest rates and stagnant growth in major economies like China and Europe could deter car buyers.
“EV demand next year could be lower than expectations,” LGES Chief Financial Officer Lee Chang-sil said on an earnings call, attributing this to economic factors and automakers adjusting their EV strategies. LGES, which supplies Tesla, General Motors, and other automakers, projected that revenue growth in 2024 would not match the mid-30% rate forecasted for this year.
A recovery in demand from European manufacturers is likely to be delayed as Chinese competitors introduce cheaper EVs in the region, Vice President Kim Gyunghoon. Reducing production at its Poland factory to cut costs. In the U.S., GM, LGES’s joint venture partner in an Ohio battery plant and two others under construction, announced it was slowing the launch of several EV models and cutting back on EV product spending to prioritize profits over sales targets.
Following these announcements, LGES shares fell as much as 6.69% to their lowest level in over a year, compared to a 0.6% decline in the benchmark KOSPI. Kang Dong-jin, an analyst at Hyundai Motor Securities, noted that LGES shares had already been impacted by negative news from GM before the earnings announcement and dropped further during the call due to the weaker outlook.
Despite the anticipated slowdown in demand growth, LGES announced it would increase the production capacity of its wholly-owned Arizona battery plant from 27 gigawatt hours (GWh) to 36 GWh to leverage U.S. manufacturing tax credits. The company plans to produce energy-dense 46-series cylindrical battery cells, offering a longer driving range, at the Arizona plant, aiming for production to start in late 2025. Additionally, LGES will produce cheaper lithium iron phosphate (LFP) batteries from 2026 to meet the demand for lower-priced EVs.
LGES reported a 40% rise in third-quarter profit to 731 billion won (USD 543.46 million), consistent with earlier guidance, driven by increased output from its Ohio joint venture factory with GM. Revenue for the September quarter rose 7.5% year-on-year to 8.2 trillion won but was down 6% from the June quarter due to the demand slowdown in Europe, production adjustments by automakers, and lower metal prices.
 warned on Wednesday of slowing revenue growth in 2024 due to global economic uncertainties affecting the outlook for electric vehicle (EV) sales, causing its shares to drop nearly 7%.){kind=link}