Possibility of Converting Production Lines in Poland and China
On Ultium Cells Plant Suspension in the U.S.: "Discussions Still Ongoing"
Kim Dongmyung, CEO of LG Energy Solution, has indicated plans to further expand the company’s annual production capacity for lithium iron phosphate (LFP)-based energy storage system (ESS) batteries next year. Although uncertainty has increased due to the slowdown in electric vehicle demand, the company’s strategy appears to be focused on strengthening its profit structure by centering on ESS, which is expected to continue steady growth.
Kim Dongmyung, CEO of LG Energy Solution, is responding to an interview with reporters ahead of the "Battery Industry Day" event held on the afternoon of the 30th at the Chosun Palace Hotel in Gangnam-gu, Seoul. Photo by Shim Sunga
Speaking with reporters ahead of the "Battery Industry Day" event held on the afternoon of the 30th at the Chosun Palace Hotel in Gangnam-gu, Seoul, CEO Kim stated, "We are making efforts to expand sales in the ESS sector, where demand remains steady." He added, "If we take into account production lines in Poland and China, our global production capacity could exceed the level disclosed in today’s earnings announcement."
Earlier that day, LG Energy Solution announced at its earnings briefing, "We plan to expand North American ESS production capacity to 30 GWh by the end of next year," and added, "We are also discussing mass production of ESS at the joint venture with Stellantis." The company also stated, "We are working to increase sales in the ESS sector and expect to maintain this direction next year." CEO Kim’s remarks suggest that, in addition to these plans, the company could consider converting some production lines at its factories in Poland and China to ESS production.
Regarding the significant improvement in operating profit for the third quarter compared to the same period last year, CEO Kim explained, "There have been one-off costs in the past, but we are now seeing structural cost improvements," and added, "This effect will become more prominent starting next year." Addressing rumors about a potential shutdown at Ultium Cells, the U.S. joint venture with General Motors (GM), he said, "The decision (to halt operations) would be made by Ultium Cells," and emphasized, "Discussions are ongoing, so it is difficult to definitively say that operations will be completely stopped."
On this day, LG Energy Solution announced that its operating profit for the third quarter of this year was 601.3 billion won, a 34.1% increase from 448.3 billion won in the same period last year. Although revenue decreased by 17.1% year-on-year to 5.6999 trillion won, profitability improved thanks to strong performance in the ESS sector and the effects of tax credits. Notably, with increased shipments of high-capacity ESS batteries from the Ochang plant in Korea and the plant in Poland, the share of ESS sales exceeded 25% of total sales for the first time.
From the second half of this year, LG Energy Solution has been inspecting production lines at its North American bases in Michigan, Ohio, and Canada. The company plans to maximize supply volume by converting some lines to ESS-exclusive production if necessary.
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