The slowing demand for electric vehicles dragged down LG's new energy business in Q4, leading to an unexpected loss with a 19% decrease in sales compared to the previous year.

South Korean battery manufacturer LG Energy Solution unexpectedly reported a loss, citing a cooling demand for electric vehicles that impacted sales. The company's preliminary performance report, released on Thursday, showed an operating loss of 225.5 billion Korean won (approximately 1.54 billion USD) for the three months ending on December 31st, compared to analysts' expectations of an operating profit of 16.4 billion Korean won. Sales were at 6.45 trillion Korean won, a 19% decrease year-on-year. Following the announcement of the preliminary performance, LG Energy Solution's stock price in the South Korean market dropped by 4% at one point, marking the largest single-day decline since December 20th of last year. The company's main customer, General Motors Company (GM.US), has cut its electric vehicle production targets. Shinyoung Securities analyst Park Jin-soo mentioned in a report that the US automaker seemed to have adjusted their electric vehicle inventory and reduced battery orders. NH Investment & Securities Co. analyst Minwoo Ju noted that the battery demand from General Motors Company, in particular, is expected to be lower than initially anticipated. In Europe, car manufacturers are struggling with weak electric vehicle demand due to rising living costs and some countries cancelling subsidies. According to data from SNE Research, LG Energy Solution held a 11.2% market share in the global electric vehicle battery market in the third quarter. Additionally, South Korean battery manufacturers plan to invest at least 5.4 billion USD in the United States, but they are concerned about the upcoming plans of President-elect Trump to impact electric vehicles. They also see ongoing political risks from GEO Group Inc that could disrupt the global electric vehicle supply chain. LG Energy Solution CEO Kim Dong-Myung previously stated, "This year faces a very challenging business environment, and the electric vehicle industry will rebound after 2026."