South Korean company LG Energy Solution (LGES) is preparing to triple its annual revenue from the sale of traction batteries for electric vehicles over the next five years. This year sales are expected to be $16.7 billion.
LG Group’s electric vehicle battery division plans to focus more on the fast-growing North American market and establish a tubular battery manufacturing base in Europe. It was previously reported that LGES intends to stop developing prismatic batteries in favor of pack and cylindrical versions for the time being.
According to LGES, the battery business will triple the profitability of battery business with companies in North America – different interaction schemes will increase the supply of cylindrical batteries, develop new form factors and open new business opportunities. In addition, the company aims to achieve double-digit operating profit margins by achieving technology leadership through the use of diverse materials and processes.
The new strategy was announced on the back of yesterday’s disappointing earnings report for the second quarter of this year. Though quarterly revenue fell just 1.2% year over year, operating income fell 73%. LG itself explains this with sanitary restrictions in China, disruptions in global supply chains and a delayed price increase for the company’s products after an increase in raw material costs.
Revenue is expected to reach about $10.37 billion in the second half, up 48% year over year, as demand for batteries from automakers grows and given the start of the first phase of Ultium’s joint venture with General Motor Cells in Ohio.
“Parent” LG Chem also reported second-quarter revenue — growing 7% year over year to $9.3 billion. However, operating income also fell — down 59% to $669.6 million .
LG Chem announced that it has signed an agreement with General Motors to supply cathode materials for Ultium cells. By 2030, the Korean manufacturer will supply the American automaker with more than 950,000 tons of battery materials, starting in the second half of this year. GM has already reaffirmed its intention to build a strong, sustainable raw materials supply chain to meet the company’s needs.