LG Energy to Boost Energy Storage Business as EV Demand Cools.

LG Energy Solution Ltd. (LGES) is strategically ramping up its energy storage system (ESS) business in the United States. This move aims to mitigate the growing pressures on its electric vehicle (EV) battery division, which is facing challenges from increasing tariffs and a global deceleration in consumer demand for EVs.

Chief Financial Officer Lee Chang Sil confirmed the company's shift following the release of LGES's better-than-expected second-quarter earnings. Lee acknowledged that the anticipated termination of US tax credits for EVs after September 30 could further impact demand for automotive batteries. However, he expressed confidence that the expansion of the ESS business, coupled with the benefits from the US advanced manufacturing credit, would help maintain the company's momentum.

"We believe that shortfalls from auto batteries can be offset by the expansion of the ESS business, while minimizing fixed costs by reallocating resources and improving cost efficiency," Lee stated. He added optimistically, "We expect meaningful profit improvement in the second half."

This strategic pivot highlights LGES's adaptability in a dynamic market, leveraging its expertise in battery technology to capitalize on the growing demand for energy storage solutions as the EV landscape evolves.