LG Energy to more than double sales to $50 bn by 2028

LG Energy Solution Ltd. has vowed to more than double its sales in five years to 67 trillion won ($50 billion) as a comprehensive energy company by diversifying its battery products and applications beyond EVs and enhancing software and service businesses.

On Monday, South Korea’s largest electric vehicle battery maker unveiled its first-ever mid-to-long-term business vision since its separation from the parent LG Chem Ltd. in 2020 as part of its efforts to fight back the prolonged slowdown in global EV demand, which has been hurting the overall battery industry.

LG Energy Solution posted an annual revenue of 33.7 trillion won in 2023 and expects this year’s revenue will shrink by 20% from last year, citing the global EV market’s slower growth of the low 20% range this year.

Under the new vision, the company will, however, strive to more than double its sales to 67 trillion won by 2028 from last year, while achieving a mid-teen percentage earnings before interest, taxes, depreciation, and amortization (EBITDA) margin, excluding the US Inflation Reduction Act tax credit, over the same period.  

For this, the Korean battery giant will expand non-EV businesses, diversify the EV battery product and customer portfolios, reinforce software and service businesses and take the lead in next-generation battery technologies, pledged the company.

“Our vision encapsulates the ultimate goal of LG Energy Solution to enable sustainable growth,” Kim Dong-myung, the chief executive officer of LG Energy Solution, told LG Energy employees on the same day.

“The meaning of this vision is to expand our business with energy that awakens all potential powers, thereby enabling the company and its members to realize infinite growth potential.”

COMPREHENSIVE ENERGY COMPANY

Energy circulation across the entire cycle from storage to movement of energy lies at the core of LG Energy Solution’s new vision, the company explained.  

To offset the EV industry slowdown, the company plans to reduce its heavy reliance on the EV battery business while expanding the energy storage system (ESS) business and developing batteries for new applications such as urban air mobility (UAM), vessels and robotics.

It will also expand its battery lineup, including dry electrode lithium iron phosphate (LFP), lithium manganese iron phosphate (LMFP) and high-voltage mid-nickel products.

But this does not mean LG Energy Solution would shun premium high-nickel batteries, on which it has focused for a long time to differentiate its products from cheaper options provided by Chinese rivals.

It plans to mass-produce its 46-series batteries for automakers and develop new form factors meeting different needs as it seeks to cement its leadership in the mobility and information technology (IT) battery market by 2028.

The so-called 4680 battery, which measures 46 millimeters in diameter and 80 mm in length, is considered a game-changer in the battery industry.

LG Energy Solution is expected to be the first Korean battery producer to mass-produce the 4680 batteries.

Battery manufacturing, however, is not the company’s sole focus. It is also pinning high hopes on software and services businesses.

On top of its battery management systems (BMS) business, it plans to offer battery leasing, rental and recycling businesses to build a battery-as-a-service (BaaS) ecosystem.

Last month, LG Energy Solution launched a new business brand called “B.around,” which offers not only battery condition monitoring software but also a safety and battery degradation diagnostics program and software-defined vehicle (SDV) platforms.

HIGHER EFFICIENCY AND BATTERY TECHNOLOGY LEADERSHIP

To overcome the EV chasm, the company plans to improve the operational efficiency of its global production facilities by 2026.

In June, LG Energy Solution halted construction of a plant for lithium iron phosphate (LFP) pouch-type batteries used in ESS in Arizona, the US, as part of its efforts to cope with the sluggish global EV demand.

By 2028, LG Energy Solution also plans to reinforce its battery technology leadership.

Using its extensive battery technology expertise, the Korean battery maker, also the world’s third-largest EV battery provider, hopes to lead the solid-state battery market with anodeless products that excludes lithium anodes and graphite-based anode products.

It will also speed up the mass production of bipolar semi-solid batteries and low-cost high-power batteries.

The company also aims a five-fold increase in revenue in its ESS business by 2028 by becoming No. 1 in the US market and the global top 3.

LG Energy Solution shares jumped 4.1% to close at 420,000 won on Monday after the company announced its first long-term business vision. 

Write to Hyeon-woo Oh at ohw@hankyung.com
Sookyung Seo edited this article.