LG Energy Solution held an earnings briefing on the morning of the 25th and achieved sales of 8.2235 trillion won and operating profit of 731.2 billion won for Q3 2023.
Sales increased by 7.5% compared to the same period last year (7.6482 trillion won) but decreased by 6.3% compared to the previous quarter (8.7735 trillion won). Operating profit rose by 40.1% from the same quarter last year (521.9 billion won) and by 58.7% from the previous quarter (460.6 billion won).
The tax credit amount from the U.S. IRA (Inflation Reduction Act) reflected in this operating profit amounted to 215.5 billion won, which is 94% higher than the previous quarter due to stable expansion and operation of new production lines. Excluding this, the operating profit for Q3 was 515.7 billion won, and the operating profit margin was 6.3%.
LG Energy Solution’s CFO, Lee Chang-sil, stated, “Sales decreased by about 6% compared to the previous quarter due to weak demand in Europe, adjustments in EV production by some customers, and the decline in metal prices in the first half of the year. However, operating profit increased due to the expansion of sales centered around high-margin products, increased productivity from new production lines in North America, and cost efficiency efforts.”
On the same day, LG Energy Solution detailed its plans to strengthen fundamental product competitiveness.
While the demand for electric vehicles in Europe and China is projected to be sluggish, and there are ongoing management challenges due to falling prices of key raw materials such as lithium and nickel, the company sees the opportunity for meaningful growth, especially as the demand for electric vehicles in North America remains strong, and there are growth opportunities in the ESS business sector.
For the premium product, high-nickel NCMA, the performance will be differentiated through enhanced safety measures such as improved thermal control technology and the application of new materials.
The nickel proportion, which was around 80% in the mid-range, will increase to over 90%, enhancing energy density and further improving safety through optimized design, module and pack cooling system development, and enhanced thermal management solutions. Additionally, the use of high-capacity, high-efficiency silicon anode materials will reduce rapid charging times to less than 15 minutes.
This will expand orders related to premium electric vehicles from major customers.
In fact, LG Energy Solution recently announced it will supply high-nickel NCMA-based pouch cells configured modules to the world’s largest automotive company, Toyota, from 2025 for 10 years, at an annual capacity of 20 GWh.
The company will also accelerate efforts to strengthen its product portfolio aimed at the mid-range electric vehicle market. This includes competitively priced high-voltage mid-nickel NCM, as well as manganese-rich (Mn-Rich) and LFP batteries.
The high-voltage mid-nickel NCM battery will reduce the nickel and cobalt content, making it approximately 10% cheaper than existing products while enhancing performance in terms of energy density and thermal safety. Full-scale production is set to begin in 2025.
LG Energy Solution has chosen the new production facility in Arizona, USA, as a core production hub for the 46-series in North America.
Reflecting the increasing demand from various automakers for the adoption of 46-series products, the company adjusted its original plan to build a 27 GWh production facility for 2170 cylindrical batteries. The production capacity is also expected to increase from the original 27 GWh to 36 GWh, with the completion and mass production schedule remaining as previously planned for the end of 2025.
Additionally, the pilot line for the 46-series being established at the ‘Mother Factory’ Energy Plant in Ochang is planned to start mass production in the second half of next year. The Ochang Energy Plant, a research and development and manufacturing hub for LG Energy Solution, is tasked with ensuring product completeness for overseas new factories. The Nanjing plant in China is expected to become a key production hub for the 2170 battery in the future.
LG Energy Solution CEO Kwon Young-soo remarked, “We will strive to differentiate product competitiveness across all product ranges, from premium to mid-priced, as a key driver of medium- to long-term sustainable growth while providing world-class customer value, aiming to become a global leading company.”
By Lee Sang-jin daedusj@autodiary.kr