The First Profit in EV Battery Business in 6 Quarters
LG Chem announced on July 31 that it posted 2.823 trillion won in sales and 155.5 billion won in operating profit in the battery sector in the second quarter, both quarterly records.
It was the first time in six quarters that LG Chem has recorded a surplus in its EV battery business since the fourth quarter of 2018.
The turnaround was led by the company’s battery plant in Poland, which benefited from the rapid growth of the European electric vehicle market. Exports of batteries from Korea to Poland fell 82 percent to 12 billion won in July of 2020 from December 2019, a researcher at Samsung Securities said. "The proportion of exports to the company’s battery sales in Europe also fell to 4 percent," the researcher said. "This means that yields at LG Chem's Polish plant has improved fast since the second quarter."
LG Chem started R&D on EV batteries in 2000 and has increased investment every year. It spent more than four trillion won on facility investment alone in 2019. It aims to ramp up its EV battery production capacity to 100 GWh by the end of 2020.
LG Chem currently has more than 150 trillion won in order backlogs. Not only Hyundai Motor and Kia Motors but General Motors, Ford, Volkswagen, Renault, Volvo, Audi, Daimler, Jaguar and Porsche are all LG Chem’s customers.
Tesla's rapid sales growth in China also gave a big boost to LG Chem's battery business. The cylinder-type batteries that LG Chem supplies to Tesla are classified as small batteries, not EV batteries.
LG Chem expects to post more than 30 trillion won in sales in the battery sector alone by 2024 due to increased demand for batteries for energy storage systems (ESSs) along with the expansion of the small battery market.