[Exclusive] LG Energy Solution Faces Electric Vehicle Chasm... Triple-Digit Workforce Reassignment at Ochang Plant

Following 288 people in the second half of last year, 102 people targeted this year

LG Energy Solution has been confirmed to be undertaking workforce reallocation at its domestic production base, the Cheongju Ochang Energy Plant (formerly Ochang Factory) in Chungbuk. As the electric vehicle market downturn pushes business conditions to the worst, the company is interpreted to be aiming to overcome the crisis by dispersing idle personnel.

According to LG Energy Solution on the 16th, the company recently posted a notice at the site inviting volunteers for reassignment among 102 personnel targeted for reassignment at the Ochang Energy Plant. The reassignment workplaces include the 4680 (46mm diameter, 80mm height) cylindrical battery line and pilot product test lines, which are scheduled for mass production by the end of this month, with assignments to be made by early September at the latest.

Last year in the second half, LG Energy Solution also reassigned 288 standby personnel to the 4680 cylindrical battery line. Mass production of the 4680 cylindrical battery, presumed to be exclusively for Tesla, is expected to start between the end of the third quarter and early fourth quarter.

Earlier this month, the company’s labor and management held an Employment Stability Committee meeting. They discussed plans for reallocating surplus personnel amid worsening internal and external conditions. An industry insider said, "Reassignments have been regularly conducted due to discontinuation of specific electric vehicle models or line expansions, but since the second half of last year, surplus personnel have increased due to the electric vehicle chasm (temporary demand slowdown), and the period these workers wait without tasks has also lengthened."

A view of LG Energy Solution Ochang Energy Plant in Cheongju, Chungbuk [Photo by LG Energy Solution]

According to the industry, LG Energy Solution has reportedly halted operations on some battery production lines as automakers delayed battery delivery dates or postponed electric vehicle development schedules due to increased inventory caused by the slowdown in electric vehicle demand. Another source said, "Besides reassigning to new lines, LG Energy Solution is also considering various measures such as internalizing subcontractors."

As of March last year, about 5,000 employees worked at the Ochang Energy Plant. LG Energy Solution has been producing energy storage systems (ESS), IT device batteries, and electric vehicle batteries at this site. Small batteries used in laptops or mobile phones are produced only in small quantities. For electric vehicle batteries, pouch-type and cylindrical types 2170 (21mm diameter, 70mm height) and 1865 (18mm diameter, 65mm height) have been produced.

Due to the electric vehicle chasm, the average operating rate of LG Energy Solution’s domestic and overseas battery plants recorded an all-time low of 57.4% in the first quarter of this year. The operating rate has continued to decline from 73.6% in 2022 and 69.3% in 2023. LG Energy Solution only discloses the integrated operating rate combining domestic and overseas plants. A company union official said, "Due to the contraction in demand in the upstream electric vehicle market, operating rates have fallen not only at domestic plants but also at plants in Poland, China, and the United States." With consecutive electric vehicle fires occurring, the sense of crisis in the battery market is growing even stronger.

The slowdown in the electric vehicle market is also affecting the parent company, LG Chem, which produces secondary battery materials. LG Chem’s labor and management also held an Employment Stability Committee meeting early last month to discuss reallocating about 50 personnel from the secondary battery separator business division. Four employees were transferred to LG Household & Health Care near LG Chem’s Cheongju plant, and plans are underway to reassign the remaining personnel to sites such as Yeosu and Daesan.

An LG Energy Solution official said, "Due to the electric vehicle market downturn, automakers are postponing electric vehicle development and launch schedules altogether, naturally causing battery production schedules and delivery deadlines to be continuously delayed."