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LG Energy Solution posts strong profit in Q1 2025

Published: 07 Apr. 2025, 18:54 Updated: 07 Apr. 2025, 21:30

Visitors look around the LG Energy Solution booth at the 2025 Interbattery trade show on March 5 in Coex, southern Seoul. [LG ENERGY SOLUTION]

Battery maker LG Energy Solution posted a stronger-than-expected operating profit for the first quarter of 2025, supported by increased shipments to North America and favorable foreign exchange rates. However, industry analysts caution that the outlook for the electric vehicle (EV) battery sector remains uncertain due to softening demand and rising trade tensions.

LG Energy Solution announced on Monday that its consolidated operating profit for the first quarter reached 374.7 billion won ($280 million) in 2025, up 138.2 percent from the same period last year. This significantly exceeded the market consensus of 67.2 billion won, according to financial data provider FnGuide.

Quarterly revenue totaled 6.27 trillion won during the January-to-March period, up 2.2 percent year-on-year but down 2.9 percent from the previous quarter. The company returned to profit after reporting an operating loss in the fourth quarter of last year.

A major driver of the strong results was the increase in tax credits under the United States Inflation Reduction Act.

LG Energy Solution booked 457.7 billion won in Advanced Manufacturing Production Credit (AMPC) benefits during the quarter, a 21-percent increase from the previous quarter’s 377.3 billion won. Excluding the AMPC benefit, the company would have recorded an operating loss of 83 billion won.

The LG Energy Solution booth at the 2025 Interbattery trade show [LG ENERGY SOLUTION]

Market headwinds persist

Despite the strong quarterly earnings, LG Energy Solution faces a challenging market environment.

The surge in shipments to North America was largely due to a temporary increase in demand from buyers seeking to avoid potential future tariffs. This suggests a possible slowdown in upcoming quarters.

The EV market itself is entering what analysts describe as a “chasm” — a period of stalled growth. Adding to the uncertainty is the potential for a 25-percent tariff on imported vehicles under a second Trump administration, which could significantly impact automakers operating outside the United States.

“Many of General Motors’ most popular electric vehicle models are manufactured in Mexico, making them vulnerable to tariffs,” said Ahn Hee-su, an analyst at DB Securities. “Joint ventures, such as those between Stellantis and LG Energy Solution in Canada, or Honda and LG Energy Solution in the United States, cannot be ruled out.”

Policy uncertainty regarding subsidies under the Inflation Reduction Act further clouds the outlook.

LG Energy Solution [JOONGANG ILBO]

Strategic Focus on ESS and U.S. Manufacturing

Korea’s three major battery makers — LG Energy Solution, Samsung SDI and SK On — see opportunities in the growing energy storage system (ESS) market, especially as trade tensions with China intensify.

ESS batteries are subject to reciprocal tariffs, with Chinese imports facing a 34-percent tariff compared to 25 percent for Korean products. Including preexisting duties, the total tariff burden on Chinese ESS batteries could reach 54 percent.

This opens the door for Korean firms to expand their share in the U.S. market, which is currently dominated by Chinese lithium iron phosphate (LFP) batteries supplied by companies like CATL.

“If tariffs are fully implemented, it would effectively amount to the United States shutting out Chinese battery suppliers from the market,” said Choi Jae-hee, a senior researcher at the Korea Institute for International Economic Policy.

To capitalize on this shift, LG Energy Solution is preparing to begin mass production of LFP ESS batteries this year at its plant in Holland, Michigan. Samsung SDI plans to launch its LFP-based Samsung Battery Box 2.0 next year, while SK On is also preparing to enter the U.S. ESS market.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.

BY CHOI SUN-EUL [[email protected]]