LG Energy Solution said on the 30th that its operating profit for the third quarter of this year came to 601.3 billion won, up 34.1% from the same period a year earlier. Operating profit excluding U.S. production subsidies was 235.8 billion won, marking a surplus for the second consecutive quarter. Revenue was 5.6999 trillion won, down 17.1% on-year.
Vice President Lee Chang-sil, chief financial officer (CFO) of LG Energy Solution, said, "Revenue fell for the EV-directed pouch business due to the impact of U.S. electric vehicle purchase subsidies at the end of September, but revenue rose 2.4% from the previous quarter as energy storage system (ESS) revenue grew sharply and the small battery business maintained solid revenue," adding, "Profitability improved despite lower North American subsidies thanks to increased shipments of ESS and small batteries and expense reduction efforts."
In fact, LG Energy Solution signed multiple ESS orders in the third quarter of this year based on its local U.S. lithium iron phosphate (LFP) production capability. The company's ESS order backlog now stands at 120 gigawatt-hours (GWh), more than double the previous quarter, with further backlog growth expected.
In the EV sector, the cylindrical 46 series alone recorded a total order backlog of more than 300 GWh. For the cylindrical 46 series, the company signed battery supply contracts totaling more than 100 GWh recently, securing more than 160 GWh in orders this year alone.
However, profit is expected to decline in the fourth quarter, and the company revised its full-year revenue target from "growth of 5–10% year-over-year" to "a mid-single-digit percent decline year-over-year." The expected benefit from tax credits under the Inflation Reduction Act (IRA) was also lowered from 45–50 GWh to 35–40 GWh.
An LG Energy Solution official said, "With U.S. electric vehicle purchase subsidies suspended in the fourth quarter, EV-directed battery volumes are expected to decrease, and factory operations are being disrupted by the situation in Georgia, making a profit decline unavoidable," while adding, "We will respond with solid ESS demand and new projects."
LG Energy Solution plans to support tailored solutions by vehicle segment in its EV business going forward. For high-performance vehicles requiring high output and fast charging, the company will secure energy density and cost efficiency with pouch-type high-nickel nickel cobalt manganese aluminum (NCMA), the cylindrical 46 series with nickel content raised to 94% or higher, and high-voltage mid-nickel products for standard models. For mid- to low-priced models, it plans to strengthen price competitiveness by applying dry electrode technology to LFP pouch-type products slated for mass production at year-end.
For the ESS business, the company is developing new products that increase energy capacity and lower per-unit expense by applying high-density, high-integration cell technology based on a long-pouch form factor. It also plans to prepare prismatic-based LFP ESS products by 2027. On the operations side, it will maximize production capacity by converting lines at North American joint plants slated to start up, in addition to the Michigan subsidiary that entered early mass production.