LG Power Answer cuts capex on slowing EV demand after This autumn loss

By Joyce Lee and Hyunjoo Jin

SEOUL (Reuters) -South Korean battery agency LG Power Answer (LGES) stated on Friday it plans to chop capital expenditure by as much as 30% this yr on slowing electrical car demand development, after posting a quarterly loss for the primary time in three years. 

The corporate, which makes batteries for Tesla (NASDAQ:TSLA), Basic Motors (NYSE:GM) and Volkswagen (ETR:VOWG_p), reported an working lack of 226 billion received ($158 million) for the October-December interval. 

The outcome compares with a revenue of 338 billion received for a similar interval a yr earlier. 

Newly inaugurated U.S. President Donald Trump stated this week his administration would take into account ending tax credit of $7,500 on EV purchases. LGES stated on Friday that scrapping the credit would put downward stress on the U.S. market.

“The modifications in U.S. tariffs and subsides might gradual the tempo of electrification within the brief time period, however we consider that there can be no main change sooner or later path of the battery business,” LG Power Answer CFO Lee Chang-sil stated throughout a convention name.

Basic Motors

LGES stated its fourth-quarter earnings had been affected by lowered demand from Basic Motors, which produces batteries with LG Power in North America for GM automobiles. Demand from the foremost buyer is predicted to recuperate beginning within the second quarter because it launches new fashions, LGES stated.

The corporate additionally stated it goals to develop its income by 5%-10% this yr, as joint battery factories with Stellantis (NYSE:STLA) and Honda (NYSE:HMC) begin manufacturing in North America within the second half of this yr.

LGES stated that as a part of its expenditure cuts it can deal with utilising present or earlier deliberate manufacturing quite than construct new vegetation in North America.

LGES, which operates three way partnership battery vegetation with GM in Ohio and Tennessee, purchased a stake from GM in one other battery plant in Lansing, Michigan, in December.

In a New 12 months message early this month, LG Power Answer CEO Kim Dong-myung stated he anticipated the EV market would recuperate after 2026, whereas additionally warning of challenges akin to the worldwide growth of Chinese language rivals. 

Income for the previous quarter fell 19% from a yr earlier to six.45 trillion received. 

Shares of LGES ended flat after the outcomes, versus a 0.9% rise within the benchmark KOSPI. 

($1 = 1,430.2000 received)