In a remarkable turn of events, LG Energy Solution, a global leader in battery technology, disclosed robust Q3 figures, showcasing an operating profit surge of 40.1% compared to the previous year. The staggering order backlog now stands at an astounding 500 trillion KRW, a testament to the company’s rapid expansion and solid market position. This surge is notably attributed to a recent contract with Japan’s automotive giant, Toyota, adding 60 trillion KRW to the backlog.
The company is poised for further growth with a strategic investment of 4 trillion KRW earmarked for its Michigan-based plant. This initiative is set to bolster production capacity and secure exclusive supply arrangements with Toyota, a pivotal move towards establishing a dominant presence in the electric vehicle market.
In response to shifting industry dynamics, LG Energy Solution is realigning its product strategy. Recognizing the growing preference for lithium, phosphate, and iron (LFP) batteries over high-nickel alternatives, the company is actively developing LFP-based products. This strategic shift acknowledges the evolving global demand for cost-effective electric vehicle solutions.
While LG Energy Solution traditionally focused on premium batteries, it is now embracing the LFP market, acknowledging its significance in catering to the mid- to low-priced electric vehicle segment. This move aligns with the industry trend where global electric vehicle manufacturers increasingly adopt LFP batteries in response to evolving market dynamics.
Vice President Lee outlined the company’s approach, emphasizing a fusion of technological strengths to create cutting-edge products, including lithium, manganese, phosphate, and iron (LMFP)-based solutions. The ambitious plans reflect LG Energy Solution’s commitment to maintaining a competitive edge in the ever-evolving electric vehicle battery landscape.
Furthermore, the company unveiled its strategic intent to leverage its new production facility in Arizona, USA, as a pivotal hub for 46-series battery production in North America. This battery format, hailed as a ‘next-generation battery’ by Tesla, underlines LG Energy Solution’s commitment to ensuring a stable battery supply to the electric vehicle behemoth.
Vice Chairman Kwon Young-soo expressed confidence in the company’s trajectory, highlighting their ambition to lead across product lines, from premium to mid-price. This strategic pivot underscores LG Energy Solution’s determination to be a global frontrunner in delivering unparalleled customer value.
However, the stock market response was subdued due to shifts in the industry landscape. Announcements by U.S. automakers, Ford and General Motors, regarding their adjusted electric vehicle production targets and adoption of Chinese-led lithium iron phosphate (LFP) batteries, raised concerns about potential shifts in demand dynamics for Korean companies. As a result, LG Energy Solution’s stock price experienced an 8.70% dip, with major battery players like Samsung SDI and POSCO Future M also witnessing significant declines.
