HOLLAND – LG Energy Solution Faces Slower Fourth Quarter Amid Weak EV Demand

LG Energy Solution experienced a slower than expected fourth quarter as demand for electric vehicles (EVs) proved weaker than anticipated, according to reporting from Bloomberg. Despite a 42% year-over-year increase in operating profits to $258 million, the figure fell short of analysts’ median estimate of $464.1 million. Additionally, the company’s revenue declined by 6.3%.

Impact of Tax Credit and EV Sales

LG’s earnings for the quarter included a tax credit of nearly $191 million resulting from President Biden’s Inflation Reduction Act, as reported by Bloomberg. Excluding the tax credit, the company’s operating profit stood at just $67.2 million.

Furthermore, EV battery and EV sales remained slower than expected during the fourth quarter. General Motors, for instance, sold only 75,000 EVs in 2023, falling significantly short of their target of 150,000 units.

Expansions in Holland, Michigan

The disappointing fourth quarter results coincide with LG’s ongoing $1.7 billion expansion in Holland, Michigan. The company is also working on a separate 53,000-square-foot space as part of a $3 billion partnership with Toyota. To support these expansions, LG acquired six properties to the north of its current facilities, including Holland’s oldest surviving home, the Old Wing Mission, for $1.9 million.

Challenges and Future Plans

In November, LG announced the layoff of 170 production team members in Holland. The company attributed this decision to the expansion transition and “automakers realigning the speed of the EV transition.” However, LG remains committed to creating 1,000 skilled and well-paying jobs in the region by 2025.

Looking ahead, Bloomberg suggests that LG’s sales may face further decline in 2024 due to the announcements by General Motors and Ford Motor Co. to use iron-based batteries instead of LG’s nickel-based batteries.

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Contact reporter Austin Metz at ametz@hollandsentinel.com.