Samsung Securities on the 18th said LG Energy Solution's sales and profit are expected to decline after 2027 due to the termination of a European electric vehicle supply contract with Ford. It lowered its target price to 4.8 million won from 5.5 million won while maintaining a "neutral" investment rating. LG Energy Solution's previous trading day closing price was 415,500 won.
LG Energy Solution carried out six order activities over the past 18 months to raise the utilization rate of its European plant. Among them, the termination of the contract with Ford this time is the largest in scale. Considering that the terminated contract was scheduled to begin in Jan. 2027, it is not easy at this point to immediately secure new orders that can replace the volume.
The strategic shift by global automakers, stemming from U.S. electric vehicle cancellations and slowing electric vehicle demand in Europe, can be summarized as follows: ▲ equipping mid- to low-priced segments with mid- to low-priced batteries ▲ improving cost efficiency in high-performance and luxury segments through large-diameter cylindrical (46 series).
Researcher Cho Hyeon-ryeol at Samsung Securities said, "At present, demand for high-nickel batteries remains solid only for cylindrical 46 series, but until electric vehicle demand growth is revised up and segments are diversified, the contraction in the position of high-nickel batteries in the short term is clear."
Cho added, "Profit recovery leveraging the strength of local production of energy storage system (ESS) batteries in the United States is positive, but electric vehicle weakness in the United States and Europe could intensify through the first quarter of next year."