LG Energy Solution recorded a profit this year in the second quarter, excluding the subsidies it received from the U.S. government under the Inflation Reduction Act (IRA). This is attributed to increased electric vehicle sales from its major customer, General Motors (GM), and the commencement of energy storage system (ESS) production in North America. SK On is also expected to reduce its losses in the second quarter due to its customer Hyundai Motor's expansion in North America. Samsung SDI faces a significant likelihood of losses for the third consecutive quarter due to a slowdown in sales from BMW and Stellantis, which focus on high-end electric vehicles.
LG Energy Solution announced on the 7th that it recorded provisional sales of 5.5654 trillion won and an operating profit of 492.2 billion won for the second quarter (April to June) of this year. Compared to the same period last year, sales declined by 9.7%, but operating profit increased by 152%. Compared to the first quarter of this year, sales decreased by 11.2%, while operating profit rose by 31.4%.
The operating profit for the second quarter includes 490.8 billion won from the U.S. government's Advanced Manufacturing Production Credit (AMPC) subsidies under the IRA. Even excluding the subsidies, the operating profit for the second quarter is a surplus of 1.4 billion won. This marks the first profit since the fourth quarter of 2023, after six consecutive quarters of losses.
One of the main contributors to the turnaround to profit is its major customer, GM. GM sold 46,280 electric vehicles equipped with LG Energy Solution batteries in the second quarter of this year, an increase from 31,886 units in the first quarter. Additionally, LG Energy Solution has converted some of its North American battery production facilities to ESS, and part of the production line at its Holland, Michigan, plant has been converted to lithium iron phosphate (LFP) batteries for ESS, entering mass production.
There are expectations that SK On will see a reduction in losses in the second quarter. This is thanks to its major customer Hyundai Motor expanding its North American operations. Hyundai has begun producing electric vehicles at its Meta Plant America in Georgia since March. SK On supplies batteries for the electric vehicles produced by Hyundai in the U.S.
Song Yoon-joo, an analyst at KB Securities, noted, "The factory utilization rate for SK On in March and April is estimated to be 100%. If the utilization rate of U.S. facilities exceeds 90% in the third quarter, the losses will be significantly reduced."
Samsung SDI's outlook for the second quarter is negative, primarily due to poor electric vehicle sales from its major customers, BMW and Stellantis. BMW's electric vehicle sales in the U.S. for the second quarter of this year (11,094 units) have decreased by 21.2% compared to the same period last year, and Stellantis's sales for the second quarter have also fallen by 10% compared to the same period last year.
An industry source in the battery sector said, "Samsung SDI is expected to diversify its portfolio and improve its performance by targeting the U.S. ESS market."