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December 11, 2018

LG Chem’s EV battery business expected to become profitable in Q4

LG Chem is expected to begin generating profits from its electric vehicle (EV) battery operations in the fourth quarter of 2018.

By bcusack

LG Chem is expected to begin generating profits from its electric vehicle (EV) battery operations in the fourth quarter of 2018. 

The chemicals company has yet to make a profit from its EV battery operations to date but a number of local analysts believe the business has turned a corner as global demand for electric and plug-in hybrid vehicles continues to rise and as raw materials prices continue to fall as due to improving supply.

LG Chem does not disclose separate financial performance data for its EV battery business but local market analysts believe the division will generate profits of around KRW196bn (US$173m) in 2019, compared with a loss of KRW114bn in 2017 and an expected loss of KRW56bn this year. 

Hwang Yoo-shik, an analyst with NH Investment & Securities, pointed out in a report released last week that "the price of the material for anodes has fallen and the production cost of rechargeable batteries has also fallen due to increased output".

LG Chem 's battery business was originally viewed as a long term project that would eventually become a key source of profits.

It is expected to account for 32% of group revenue in 2019 compared with 23% in 2018.

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