LG Energy Solution, a battery supplier to Tesla and other automakers, announced record preliminary third-quarter results after growth in energy-storage batteries in the United States and expansion of the electric-vehicle market in Europe offset part of the decline in demand for vehicle batteries in North America.
According to a regulatory filing in South Korea, the company’s quarterly revenue rose 59% year over year to $7.21 billion, while operating profit increased 25% to $565 million. The company is scheduled to publish its full official results in November.
Storage offsets the slowdown in the automotive market
LG Energy Solution reduced electric-vehicle battery production at its North American facilities because of weak demand, but growing demand for stationary energy-storage systems has begun to offset these losses. This increase is linked to the expansion of data centers that rely on artificial-intelligence applications, along with electricity-grid modernization projects.
The company produces energy-storage-system batteries domestically at several U.S. factories, allowing it to benefit from demand associated with electrical infrastructure and data centers, rather than from the automotive market alone.
Europe supports automotive-battery activity
In Europe, sales of plug-in electric vehicles helped strengthen the company’s business. LG Energy Solution’s plant in Poland is seeing strong demand from Volkswagen and Renault as their electric-vehicle sales grow in the European market.
The results show that the battery market is no longer moving at a single pace: slowing electric-vehicle sales in North America are weighing on production plans, while demand for stationary storage is increasing in the United States and electric-vehicle sales are accelerating in Europe.
Incentives and the local supply chain
Company reports and the parties cited by them attributed part of the improvement in profits to battery-manufacturing credits under the U.S. Inflation Reduction Act, in addition to compensation from automakers for failing to meet minimum battery-purchasing requirements.
Although a subsequent U.S. law repealed some climate policies, including the federal electric-vehicle credit, domestic-manufacturing credits under Section 45X remained available through 2032, according to the source article.
LG Energy Solution is also working to localize more of its supply chain in North America. It signed a multiyear supply agreement with Canadian company Elevra Lithium to obtain 240,000 metric tons of raw lithium concentrate from a mine in Quebec.
What is changing in practice?
The results show that battery companies are reallocating investments from automotive-battery production alone toward storage linked to power grids and data centers. They also reveal that current profits depend partly on government incentives and contractual compensation, so the figures do not necessarily mean that demand for electric vehicles is strong in all markets.
In August, the company opened a $2 billion gigafactory in Lansing, Michigan, producing lithium iron phosphate batteries for energy-storage systems for Tesla and nickel-manganese-cobalt batteries for electric vehicles for Toyota.