SEOUL – Tesla supplier LG Energy Solutions Ltd (LGES) (373220. KS) said on Wednesday it is looking at sites in Europe for a new battery plant and will ramp up production in Asia outside of China, where the COVID lockdown and The rising cost was weighing profits on.
The South Korean firm, which supplies electric vehicle (EV) batteries to automakers, including General Motors Company (GM.N), Ford Motor Co (F.N) and Volkswagen AG (VOWG_p.DE), said it grew in Europe, Responding to the demand. Cylindrical battery – The type used by Lucid and Tesla Inc (TSLA.O).
The company did not say how much it planned to invest in the new European plant or give a time frame for construction.
LGES said it would use its Asia production sites outside of South Korea and China, such as its battery joint venture with Hyundai Motor Co (005380.KS) in Indonesia, to better respond to customer demand.
“With the easing chip shortage and auto customers’ plans to launch new models as well as solid EV demand among customers, we expect solid demand for the pouch and cylindrical EV batteries in the second half of this year,” Chief Financial Officer Lee Chang Sil said in a post-earnings conference call.
Analysts are divided on the near-term outlook for EV demand as inflation and interest rates surge, while snarled supply chains and China’s COVID-19 containment measures disrupt production.
Still, some analysts said it would take another year for premium EV sales to slow and impact battery sales because supplies were tight due to pent-up demand.
LGES said it aims to expand joint ventures for pouch and cylindrical batteries for strategic customers and EV startups in North America.
It said it reviewed a 1.7 trillion won ($1.29 billion) investment in a cylindrical cell plant in Arizona and would issue a statement in three months. There was no change in customer demand, but extreme inflation plus rising logistics and building costs prompted in June to delay construction. It had said in March it would begin production in the second quarter.