The decline in demand for electric vehicles hits battery giant LG Energy Solutions unexpectedly recorded an operating loss in the fourth quarter.

Due to a slow decline in demand for electric vehicles in the main market, the outlook for LG New Energy, the largest battery manufacturer in South Korea, is dim as the company reports an unexpected operating loss in the preliminary results of the fourth quarter. The company reported an operating loss of 122 billion Korean won (equivalent to 83.8 million US dollars) for the three months ending December 31. This is far below the analysts' expected profit of 3.31 billion Korean won, although the loss narrowed from 22.55 billion Korean won in the same period last year. LG New Energy will announce its final performance later this month. If it werent for the advanced manufacturing tax credits in the United States, the loss would have amounted to 454.8 billion Korean won. Revenue decreased by 4.8% to 61 trillion Korean won. The company will release its final results later this month. Following the performance announcement, the stock price of LG New Energy in Seoul remained stable, but concerns are growing in the market about the loss of momentum in the global transition to electric vehicles, leading to a 20% decline in its stock price over the past month. This upheaval has been particularly severe in the United States, where President Trump has canceled federal tax credits for electric vehicle purchases and plans to significantly weaken fuel efficiency requirements. This financial impact has already affected some of the most well-known companies in the industry: General Motors warned that it would incur an additional $6 billion in costs due to production cuts; Ford Motor announced charges of $19.5 billion due to restructuring its electric vehicle business. The challenges faced by battery manufacturers are also increasing. Ford has canceled a battery agreement worth 9.6 trillion Korean won with LG and is dissolving its joint venture with SK Innovations battery division SK On in the United States as it scales down its electric vehicle ambitions. Germanys Freudenberg Battery Power Systems canceled a 3.9 trillion Korean won agreement with LG New Energy as it exits the battery business. LG New Energy has also sold its facilities and other assets of a battery plant it operated with Honda in Ohio to the Japanese automaker in order to improve operational efficiency. In addition to the setback in support for electric vehicle transition policies, LG New Energy faces resistance from US tariffs and increasing competition from Chinese rivals. Furthermore, the company is still trying to overcome the impact of an unprecedented immigration raid it faced with Hyundai at a joint factory in Georgia last September, where hundreds of Korean workers were detained. As the outlook for electric vehicles worsens, LG New Energy has been expanding its energy storage system (ESS) business and building two production lines in Arizona and Michigan. CEO Kim Dong Myung of LG New Energy stated this week that the company will accelerate the transformation of its electric vehicle battery production in North America, Europe, and China to enhance its ESS capacity. The company's goal is also to prioritize the use of artificial intelligence in product and material development and manufacturing, aiming to increase productivity by at least 30% by 2030. He stated in his New Year's address, "I am seeking to fully realize the growth potential of our ESS business. The demand for ESS is expanding at an unprecedented rate, and this is a key opportunity that will determine the success of our investment portfolio restructuring."