LG Energy Solution Warns of Q2 Sales Dip as Automakers Grapple with Tariff Fluctuations

By Heekyong Yang and Joyce Lee

SEOUL (Romero.my.id) – South Korea-based battery manufacturer LG Energy Solution (LGES) announced on Wednesday that they anticipate their revenues for the second quarter ending in June will decrease compared to those of the first quarter. This forecast partially reflects uncertainties stemming from U.S. trade tariffs.

The news caused LGES' stock price to fall by up to 4.4% around noon (0300 GMT), contrasting with a decline of only 0.7% for the benchmark KOSPI index.

LGES, which counts Tesla, General Motors, and Hyundai Motor among its clients, pointed out that major car manufacturers were likely to proceed cautiously with their battery orders due to uncertainties surrounding U.S. tariff policies.

CFO Lee Chang-sil stated during the earnings call that manufacturers producing outside the U.S. but supplying to the country are meticulously reviewing their production approaches.

"Although there were anticipations that LG Energy Solution might experience a revenue recovery in the second quarter, the company forecasted a decline in Q2 revenues relative to the prior quarter, seemingly cooling off market sentiments," noted Kim Hyun-soo, an analyst from Hana Securities.

LGES announced on Wednesday that they anticipated reducing their investment for 2025 by approximately 30% compared to what was planned for 2024.

It has temporarily halted the construction of its energy storage system (ESS) battery factory in Arizona, opting instead to leverage its current capabilities at the Michigan facility. There, it plans to begin manufacturing lithium iron phosphate (LFP) batteries for ESS later this year, which is ahead of their original schedule by one year.

LG Energy Solution announced plans to expand its energy storage systems (ESS) operations to offset the effects of reduced electric vehicle (EV) demand in North America. The firm noted that Chinese competitors wouldn’t be able to penetrate this market temporarily because of imposed tariffs. Additionally, LG ES stated it will keep working on establishing a supply chain independent of China.

LG Energy Solution saw its first-quarter profit jump by 138%, reaching 375 billion won ($261.96 million). This increase was partly due to beneficial currency exchanges, which offset the decline in electric vehicle sales growth in key international markets.

In a regulatory filing, the battery manufacturer stated they would have reported an 83 billion won operating loss had they not received a tax incentive under the U.S. Inflation Reduction Act.

In the first quarter, the average exchange rate for the South Korean won stood at 1,452.9 against the U.S. dollar, which represents an 8.5% depreciation compared to the previous year’s average of 1,329.4. This implies that LG Energy Solution can acquire more won when converting dollars obtained from sales within the United States.

Additionally, strong electric vehicle sales reported by their client GM contributed positively to the company’s Q1 earnings, according to analysts. The American car manufacturer disclosed that its domestic electric vehicle sales reached 31,887 units in the first quarter, marking an increase of 94% compared to the same period in 2024.

On Tuesday, GM withdrew its yearly prediction amid uncertainties caused by the trade conflict initiated under U.S. President Donald Trump’s administration. Additionally, the company rescheduled its investors’ conference call because of adjustments to the United States' policies on import tariffs.

On the same day, Trump issued two executive orders aimed at mitigating the impact of new tariffs on the automobile sector, providing a combination of tax incentives and exemptions from certain duties on raw materials.

LGES mentioned that sales of GM's mainstream electric vehicles rose from one month to the next during the March quarter. However, they stated that they would adopt cautious estimates regarding production for GM due to ongoing fluctuations in tariffs.

($1 = 1,431.5000 won)

(Reported by Heekyong Yang and Joyce Lee; Edited by Christopher Cushing and Kate Mayberry)