South Korea’s LG Energy Solution (LGES) is looking for new electric vehicle battery (EV) production sites in Asia – but not in China.
China’s zero-Covid policy, which has snarled supply chains and hurt production in the country, prompted the company to seek EV batteries factory sites elsewhere in Asia, as well as in Europe.
LGES, which counts EV makers Tesla and Lucid as customers, also said it was still reviewing its 1.7 trillion won ($1.29 billion) investment for a battery plant in the US state of Arizona, and planned to reissue a statement about it in three months.
There was no change in customer demand for the plant, LGES said, but the company was reviewing plans due to EV batteries’ market conditions in North America, including extreme inflation and rising construction and logistics costs.
The company added it aims to expand joint ventures with customers for pouch and cylindrical batteries for strategic customers and electric vehicle (EV) startups for the North American market.
Opinions Divided On EV Demand
Shares in the company, which also sells EV batteries to General Motors, Ford and Volkswage, fell as much as 3% on Wednesday after a six-month post-listing lock-up on its shares expired.
Analysts are divided on what EV demand will look like as inflation and interest rates surge. Some analysts said it would take another year for premium EV sales to slow and impact battery sales because supplies were still tight due to pent-up demand.
LGES raised its revenue outlook for the full year to 22 trillion won from its previous forecast of 19.2 trillion won and above the 20.9 trillion won average of analyst estimates compiled by Refinitiv.
For the quarter ended June, LGES said revenue fell 1.2% on year to 5.1 trillion won. Sales to Tesla during the quarter took a knock because of a pause in production at its Shanghai factory due to zero-Covid lockdowns.
- Reuters, with additional editing by George Russell