Battery maker LG Energy Solution's second-quarter profit dropped 58% year-on-year to 195.3 billion won ($141m), the company said on Monday (8 July), as demand for electric vehicles (EVs) slows:
The South Korean-based battery company also saw its revenue drop 30% to 6.2 trillion won ($4.4bn).
The company also faces increased competition from its Chinese rivals, which has weakened its share of the market.
Car manufacturers have been calling for battery companies to create cheaper cells to lower EV prices, which has applied pressure to companies like LG Energy.
This led to LG Energy's chief technology officer, Kim Je-Young, stating that the company would commercialise dry-coating technology by 2028, a technology which makes battery manufacturing cheaper and more efficient.
Battery maker SK On declares 'emergency' as EV sales disappoint. Supplier to Ford and Volkswagen may have to be rescued by its South Korean parent as losses mount:
A leading South Korean producer of electric vehicle batteries has declared itself in crisis as its customers struggle with disappointing EV sales in Europe and the US.
SK On, the world's fourth-largest EV battery maker behind Chinese giants CATL and BYD and South Korean rival LG Energy Solution, has recorded losses for 10 consecutive quarters since being spun off by its parent company in 2021. Its net debt has increased more than fivefold, from Won2.9tn ($2.1bn) to Won15.6tn over the same period, as western EV sales have fallen far short of its expectations.
With losses snowballing, chief executive Lee Seok-hee announced a series of cost-cutting and working practice measures last Monday, describing them as a state of "emergency management".
[...] SK On has made a series of aggressive investments in the US and Europe in recent years, betting on a widely predicted boom in demand for EVs. However, it has since announced extended lay-offs for workers at its plant in the US state of Georgia and delayed launching a second plant in Kentucky, a joint venture with its principal US customer Ford.
Previously:
- LG Energy Solution to Spend $3 Billion to Expand EV Battery Production in South Korea
- Honda and LG are Investing $3.5 Billion in New Ohio Battery Factory
- Ford Motor Company is Planning a Big EV Future
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It has a planned capacity of 40 GWh/year of lithium ion cells by end of 2025:
A key component of the revised electric vehicle tax credit is a requirement for an ever-increasing amount of domestic content in those EVs' battery packs. Automakers and battery manufacturers were already in the process of setting up US manufacturing to be closer to locally built EVs, and that trend has accelerated ever since.
At the end of August, Honda and LG Energy Solutions announced that they were forming a joint venture to build a US battery factory. And on Tuesday, the pair announced that the factory would be in Fayette County, Ohio, about 40 miles (64.4 km) southwest of Columbus.
Honda and LG will spend $3.5 billion on the new plant after regulatory approval. Assuming that happens relatively rapidly, the plan is to begin construction in 2023 and finish the building work by the end of 2024. Honda said that by the end of the following year, the factory should have an annual capacity of 40 GWh. Honda and LG also said the factory should create 2,200 jobs in the area.
[...] The cells that the plant produces will be used in Honda's new "e:Architecture" platform. The first EVs to use e:Architecture should go on sale in the US in 2026 and will be built in North America.
LG Energy Solution said on Monday that it will spend 4 trillion won, or approximately $3.07 billion, up until 2026 to expand its electric vehicle (EV) battery production in South Korea:
The funds will go into expanding and building new battery production facilities at the Ochang industrial zone located in Cheongju, the capital city of North Chungcheong Province southeast of Seoul. LG Energy Solution already operates a cylindrical battery production facility at Ochang.
Additional production lines to be built there will adopt the latest smart factory solutions such as logistics automation, remote support, and intelligent manufacturing, the South Korean battery maker said.
The local governments of North Chungcheong Province and Cheongju said they will provide financial and administrative support to LG Energy Solution for the plan. The move by the company is expected to create around 1,800 new jobs.
Previously: Honda and LG are Investing $3.5 Billion in New Ohio Battery Factory
Ford: the US Can't Compete With China on Electric Vehicles, for Now
"We need to be ready, and we're getting ready":
Bill Ford, executive chairman of Ford Motor Company, has warned that when it comes to the production of electric vehicles, the United States is still not ready to compete with China. Speaking about China's EV industry during an interview with CNN's Fareed Zakaria GPS, Ford said "They developed very quickly, and they developed them in large scale. And now they're exporting them [...] They're not here but they'll come here we think, at some point, we need to be ready, and we're getting ready."
The US automaker in February announced that it would be investing $3.5 billion in building an electric vehicle plant in Michigan. Reuters writes that the deal will use technology from Chinese battery company Contemporary Amperex Technology Co. Ltd, which led to Senator Marco Rubio asking the Biden administration to review the deal. Ford says the Michigan battery plant is a chance for Ford engineers to learn the technology and use it for themselves.
"It [Michigan] is a wholly owned Ford facility. They'll be our employees, and all we're doing is licensing the technology. That's it." Ford said.
[...] Buttigieg added that the US must build relationships domestically and internationally for raw materials and refining capacity. Chinese firms make up more than half of the EV battery market and provide as much as 90% of the demand for some battery materials.
Losing ground in the race to produce electric vehicles, German and French carmakers are heading toward a disruptive wave of factory closures:
Volkswagen AG is considering factory closures in Germany for the first time in its 87-year history, parting with tradition and risking a feud with unions in a step that reflects the deep woes roiling Europe's auto industry.
After years of ignoring overcapacity and slumping competitiveness, the German auto giant's moves are likely to kick off a broader reckoning in the industry. The reasons are clear: Europe's efforts to compete with Chinese rivals and Tesla Inc. in electric cars are faltering. (full article is paywalled)
"If even VW mulls closing factories in Germany, given how hard that process will be, it means the seas have gotten very rough," Pierre-Olivier Essig, a London-based equities analyst at AIR Capital, told Bloomberg. "The situation is very alarming."
[...] Car sales in Europe are down nearly one-fifth from prior to the COVID-19 pandemic and EV demand has slackened as Germany and Sweden have removed and reduced incentives to purchase the vehicles, Bloomberg reported. As a result, Chinese EV manufacturer BYD has jumped into the European market, pricing its Seagull model at just $9,700 before tax, a far cry from the European's average EV cost of $48,000 in 2022.
VW began downsizing in July, with its Audi subsidiary cutting 90% of its 3,000 person workforce at its manufacturing plant in Brussels, Belgium, according to Bloomberg.
The company's share price is now approaching the lows of its 2015 "diesel crisis," when the U.S. Environmental Protection Agency accused the company of installing illegal software in its cars in order to artificially improve its results on diesel emission tests, BBC News reported. The company also posted a €100 million net cash flow loss on its automotive business in the first half of 2024.
Related:
- South Korean EV Battery Makers Reporting Big Losses as EV Demand Slows
- General Motors Lays Off Hundreds Of US Workers
- Auto Woes
- Why are All the EVs so Expensive?
Last week, the House approved a resolution to block the Biden administration's emissions rule that would require more than half of the automobiles sold in the new-car market to be electric by 2032. The 215 representatives who voted for the bill, including eight Democrats, are far more in tune with most of the country than the White House:
Nationwide, the inventory of unsold EVs had grown by nearly 350% over the first half of 2024, creating "a 92-day supply — roughly three months' worth of EVs, and nearly twice the industry average," says Axios, which is 54 days for gasoline-powered vehicles.
Ford, which lost nearly $73,000 on each EV it sold in the second quarter of 2023, continues to yield to reality, now ditching its plans to build a large electric SUV. This "course change," says Just the News, "comes amid lower-than-expected demand for electric vehicles."
[...] "Based on where the market is and where the customer is, we will pivot and adjust and make those tough decisions," said John Lawler, Ford's chief financial officer.
[...] "Of the U.S. consumers planning on purchasing a new vehicle in the next 24 months, only 34% intend to purchase an EV, down 14% from 48% in the 2023," says Ernst & Young's Mobility Consumer Index, "a global survey of almost 20,000 consumers from 28 countries."
The story is much the same in Britain. EVs "are losing value at an 'unsustainable' rate as a slowdown in consumer demand sends used car prices tumbling," the Telegraph reported last week. Meanwhile in France, "the EU's second largest market for battery electric vehicles behind Germany," deliveries have fallen by a third.
Germans are likewise losing interest, as the country has "suffered a 'spectacular' drop in electric car sales as the European Union faces growing calls to delay its net zero vehicle targets," the Telegraph said in a separate story.
Related:
- Stellantis Lays Off Thousands of Workers after Pocketing Hundreds of Millions in EV Subsidies
- VW Turns on Germany as China Targets Europe's EV Blunders
- South Korean EV Battery Makers Reporting Big Losses as EV Demand Slows
- Tesla Lays Off 'More Than 10%' of its Global Workforce
- Why are All the EVs so Expensive?
(Score: 4, Interesting) by Runaway1956 on Saturday August 10, @08:29PM (3 children)
You're not selling batteries to EV makers? So, just repackage the batteries for sale to solar power people who need to store some energy. The energy that will move a two ton EV 300 miles will probably keep an energy efficient home running for a week or so. Disasters that knock out power for more than a week are relatively rare. Hey, I'd love having an uninterruptible power supply that lasts a week!
“I have become friends with many school shooters” - Tampon Tim Walz
(Score: 3, Informative) by fliptop on Saturday August 10, @10:09PM (1 child)
The best reason for using deep-cycle lead-acid vs. lithium seems to be initial cost [solartechadvisor.com]. Lithium wins in all other categories. The linked article mentions
Although the battery chemistry is considered quite safe care must be taken to ensure they're never [youtube.com] ever [youtube.com] damaged [youtube.com]. Of course, there's [youtube.com] always [youtube.com] a risk [youtube.com] involved.
Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.
(Score: 4, Insightful) by drussell on Sunday August 11, @12:12AM
The inability to charge at low temperatures is also a show-stopper for Li-ion in some applications.
(Score: 3, Interesting) by Anonymous Coward on Sunday August 11, @02:45AM
> The energy that will move a two ton EV 300 miles will probably keep an energy efficient home running for a week or so.
Let's run some numbers:
Typical BEV batteries are between 50 KWh and 100 KWh. https://www.ev.guide/lesson-articles/ev-battery-capacity-and-estimating-range [www.ev.guide]
If your house averages 1Kw (perhaps on the high side, unless you are running AC and/or heating with a heat pump) then a car battery will last for 50 - 100 hours (minus the inefficiency of the inverter to convert from DC to 115VAC) so say 2-4 days of cloudy weather when the solar isn't producing.
Cost of that battery ranges from $7000 to $12,000. I left out the batteries larger than 100 KWH shown on https://www.ev.guide/lesson-articles/ev-battery-capacity-and-estimating-range [www.ev.guide] and I've ignored the cost of the battery management system built into the car (monitoring charge of each cell)--I think that article is just the replacement cost of the cells?
For another LI-Ion data point, consider an integrated backup system, Tesla Powerwall: about $10,000 (more with installation) for 13.5 kWh capacity (much less than any BEV). https://www.marketwatch.com/guides/solar/tesla-powerwall-cost/ [marketwatch.com] this page mentions that most solar house backups use 2 or more Powerwalls.
Compare to my homebrew backup which runs my gas boiler and circulator pump, plus the fridge, a few LED lights, and computers. We're in an area that had ice storms and often have power out in the winter for a day or two. I have a 2500W (continuous) 12V to 115VAC inverter (less than $200 at Harbor Freight) that runs off the car I already have. The inverter loafs along until time to start the pump or fridge, then may approach the 5000W surge rating for about a second. At idle (enough to keep the 12V lead-acid car battery charged) the car burns perhaps 4 gallons of gasoline per day, about $15 at current prices.
I won't be buying BEV batteries or Powerwalls for backup any time soon. I'm just not that into virtue signaling.
(Score: 2) by MostCynical on Saturday August 10, @09:36PM (2 children)
There is a continuing increase in demand for batteries.
The rate of increase has slowed.
EVs are one type of battery, so is the issue packaging of cells, or chemistry of the batteries being made in S Korea? I doubt every South Korean factory is making the same type of battery, anyway.
https://www.iea.org/reports/global-ev-outlook-2024/trends-in-electric-vehicle-batteries [iea.org]
"I guess once you start doubting, there's no end to it." -Batou, Ghost in the Shell: Stand Alone Complex
(Score: 0) by Anonymous Coward on Sunday August 11, @01:55AM (1 child)
The story is another deliberately misleading one trying to push the agenda that EVs are no good and therefore we should all keep using ICEs.
FFS even mid-range commercial planes are being developed to run on batteries [youtube.com].
Any way that a story can be put that something is wrong with a technology that threatens fossil fuels is pushed hard. I wonder who is paying for these "story"s?
(Score: 2) by DadaDoofy on Sunday August 11, @06:09PM
Ok. Let's just say for argument's sake these batteries can be produced at scale for the same or less than it costs to produce the current EV batteries. Just 1% of the vehicle's in the US are electric. Already some states have to beg EV drivers not to charge in times of high demand, proof that the system is inadequate for even the current demand.
Even if we completely stopped production of EVs, the retrofitting of batteries with higher energy density to EVs currently on the road would increase demand on our power infrastructure beyond what it can produce. This drives up the cost of electricity. Of course, EV advocates say we'll just build more power plants, completely dismissing how difficult, time consuming and expensive it is to do so.
The other dirty little secret is, while EVs are marketed as "clean and green" and virtue signaled as such, 61% of electricity generated in the US comes from fossil fuel. If we increase power generation capability by the 80% experts say it would take to power all vehicles with electricity, we would burn nearly 50% more fossil fuel than we do now, just generating the electricity.