LG Energy Solutions US tariff, warns to slow down the demand for EV battery due to policy headwind

The South Korean battery firm LG Energy Solution on Friday warned of demand and recession in demand due to American tariffs and policy uncertainties earlier next year, as this quarterly gains after jumping.

Its prominent customers Tesla and General Motors warned of a fallout from US tariffs and laws that will end federal subsidy for EV procurement on 30 September.

CFO Lee Chang-Sil said during a conference call, “US tariffs and EV subsidies will be burdened with automakers at the early end of the EV and EV subsidy, which will probably lead to an increase in vehicle price and recession in EV growth in North America.”

However, Legs said that by cutting or delaying investment plans, the production of batteries for energy storage systems (ESS) is expected to improve profits in the second half.

LGES LFP is one of some American producers of batteries, which is a battery chemistry, which has long dominated Chinese rivals.

The company said it is considering converting some EV battery production lines in the United States to fulfill ESS in response to slowing the EV demand.

It began production of LFP batteries at its Michigan factory in May, and its objective is to extend the production capacity of ESS battery to more than 30 GWhut hours (GWH) this year, up to 17 GWH, by next year.

“When the legs operate the plant at full capacity, it can generate subsidy for about 2 trillion won ($ 1.5 billion US) … Unlike EV battery, ESS, the ESS, involves selling full systems instead of battery cells, which increases the average sales prices and margins,” Kang Dong-Jeen, “Kang Dong-Jeen, said an analyst of Kang Dong-Jeen.

Kang said the legs currently stands as the only player in the US market, capable of supplying LFP-based ESS, making it almost no competition.

Legs stated that its operational benefit exceeded doubled in the second quarter, thanks to US subsidy on battery production and stockpilling by some customers ahead of potential tariffs.

It reported the operational benefit of 492 billion ($ 358.73 million US) for the period from April to June, winning the profit of 195 billion a year ago.

Legs said in a regulatory filing that the legs would have made a 1.4 billion-win operational profit to be made under the reduction in inflation in the US inflation.