LG Energy Solution lowers investment due to decreasing EV demand following Q4 loss.

LG Energy Solution

After reporting a quarterly loss for the first time in three years, South Korean battery company LG Energy Solution announced on Friday that it intends to reduce capital investment by up to 30% this year to halt the rise of electrical vehicle demand.

For the October–December period, the company, which produces batteries for Tesla, General Motors, and Volkswagen, recorded an operational loss of 226 billion won ($158 million).

The outcome contrasts with a 338 billion won profit for the same period last year.

This week, U.S. President Donald Trump announced that his administration will look at eliminating $7,500 tax incentives for EV sales. Removing the credits would cause the U.S. market to decline, LGES stated on Friday.

During a conference call, Lee Chang-sil, CFO of LG Energy Solution, stated, “We believe that there would be no big shift in the future direction of the battery sector, but the changes in U.S. tariffs and subsidies could limit the pace of electrification in the short term.”

LGES stated that lower demand from General Motors, which works with LG Energy to create batteries for GM vehicles in North America, had an impact on its fourth-quarter profitability. As it introduced new models, LGES predicted that demand from large clients would begin to rebound in the second quarter.

As joint battery facilities with Stellantis and Honda begin production in North America in the second half of this year, the business also stated that it hopes to increase its sales by 5% to 10% this year.

LGES stated that rather than constructing new factories in North America, it will concentrate on using its current or previously planned output as part of its spending reductions.

In December, GM sold a share in another battery factory in Lansing, Michigan, to LGES, which runs joint venture battery operations with GM in Ohio and Tennessee.

Kim Dong-myung, the CEO of LG Energy Solution, stated in a New Year’s address earlier this month that he anticipated the EV market will rebound after 2026, but he also cautioned about potential obstacles like the globalization of Chinese competitors.

Revenue for the most recent quarter was 6.45 trillion won, a 19% decrease from the same period last year. Following the findings, LGES’s stock closed the day unchanged, while the benchmark KOSPI increased by 0.9%. $1 is equal to 1,430,2000 won.

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