Operating profit for the three months ended June 30 dropped 58% from a year earlier to 195.3 billion won ($141 million), the Seoul-based company said Monday. That was lower than estimates of 282 billion won, according to data compiled by Bloomberg. Excluding a tax credit from the US Inflation Reduction Act, LG made a 252.5 billion won operating loss. Revenue dropped 30% to 6.2 trillion won.
The supplier to automakers including Tesla Inc. and General Motors Co. has been struggling with slowing sales of EVs and a drop in lithium prices tied to its selling prices. Carmakers also pressured battery makers to supply cheaper cells in order to lower EV prices as high interest rates hurt demand. At the same time, LG Energy has been losing share in the global EV battery market due to the growth of Chinese rivals.
Tesla’s share of the global EV market dropped to 11.1% this year through the end of May, compared to 14.8% last year, according to SNE Research, as the carmaker’s older lineup struggles to keep up with fresher offerings from competitors. In Europe, companies including Volkswagen AG, Stellantis NV, and Mercedes-Benz Group AG are scaling back or refocusing battery projects.
“The price of batteries for EVs slumped by almost $50 per kilowatt-hour from its high to around $100,” said Dongjin Kang, an analyst at Hyundai Motor Securities Co. in Seoul. “It means the battery cost fell nearly by $4,000 for GM’s electric SUV Equinox. There’s no reason for carmakers to purchase batteries at the moment, they are still waiting for the price to fall further in the second half.”
The report was preliminary and LG Energy will announce final results later this month. LG Energy shares fell as much as 1.4% after the results were released, and recently were little changed.
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