LG Energy Solution to reduce capital expenditure this year amid sluggish EV demand

LG Energy Solution (LGES) intends to minimize capital expenditure this year due to a slowdown in global electric vehicle (EV) demand. This decision follows a 75% decline in first-quarter profit.

For January-March, LGES reported an operating profit of 157 billion won ($114 million), down 30% from the previous year, with revenue totaling 6.1 trillion won.

The company credits a tax credit received under the U.S. Inflation Reduction Act for preventing a 32 billion won loss, which would have marked its first loss since listing in 2022.

Chief Financial Officer Lee Chang-sil announced on an earnings call that LGES plans to adjust its investment priorities in light of mid-to-long-term demand considerations and essential expansion in the United States. Consequently, the company will scale back its capital expenditure this year.

Previously, LGES had announced that its capital expenditure for this year would mirror the 10.9 trillion won spent last year. The company anticipates performance improvement in the second half, driven by new EVs from U.S. customers like GM . However, it also acknowledges risk factors for EV demand , including the U.S. presidential election and government environmental policies.

LGES also eyes potential business opportunities for its 46-series cylindrical battery products , particularly in the more affordable EVs that Tesla plans to introduce.

The share price of LGES fell by 2% as of 0241 GMT, compared to a 1% drop in the benchmark KOSPI.