LG Energy Solution Q2 Profits Surge Amid Robust US Demand

LG Energy Solution Reports Q2 Profit Driven by North American Market

On Monday, LG Energy Solution reported a Q2 profit, mainly attributed to excellent performance in the electric vehicle and energy storage systems sectors in North America.

The company’s preliminary earnings show a 152 percent increase in operating profit between April and June, amounting to 492.2 billion won ($360.5 million). However, the sales revenue saw a 9.7 percent decrease to 5.56 trillion won compared to the previous year.

Notably, this marks the first time in six quarters that LG Energy Solution has seen a profit without financial benefits from the Advanced Manufacturing Production Credit as part of the US Inflation Reduction Act. The company recorded an AMPC-excluded profit of 1.4 billion won in Q2.

An industry source highlighted that the profit increase was driven by growing demand for profitable battery products from North American clients, local ESS production in North America, and ongoing cost-saving efforts.

In a significant move, LG Energy Solution signed a supply contract with US-based Delta Electronics to deliver 4 gigawatt-hour battery cells for ESS applications, enough to power 400,000 US households for a day. The company also commenced mass production of lithium iron phosphate (LFP) pouch cells at its Michigan plant.

However, the source noted a sales decline in the same quarter, partly due to conservative inventory management by European automakers and decreased production volume in China, a strategic move to avoid US tariffs on Chinese-made ESS products.

In line with its cost-cutting strategies, LG Energy Solution suspended its planned ESS investment in Arizona, opting to utilize its Michigan plant instead. This was in response to a slump in the global EV industry, leading to the acquisition of a third joint venture plant with General Motors in Michigan to meet EV battery demand.

LG Energy Solution acknowledged the challenges in predicting market demand due to major US policy changes but sees the initiation of mass production for new battery chemistry products for European EVs and full-scale ESS production in North America as key opportunities to boost earnings in H2 2021.

Industry insiders argue that the recent passage of Donald Trump’s “One Big Beautiful Bill” is likely to impact Korean battery companies like LG Energy Solution minimally, as the AMPC is due to end after 2031, only one year earlier than planned. Contrastingly, the $7,500 consumer tax credit for new EV purchases under the IRA has been fast-tracked to this September from the end of 2032.