LG Energy aims to more than double sales to $50 billion by 2028

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

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

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

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

To achieve this, the Korean battery giant will expand its non-EV businesses, diversify its EV battery product and customer portfolios, reinforce software and service businesses and aggressively innovate next-generation battery technologies, the company pledged.

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

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

COMPREHENSIVE ENERGY COMPANY

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

To offset the EV industry slowdown, the company plans to ease its 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, 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 will shun premium high-nickel batteries, which it has focused on 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 battery market by 2028.

The so-called 4680 battery, measuring 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 maker to mass-produce the 4680 batteries.

Battery manufacturing, however, is not the company’s sole focus. It is also placing high hopes on the 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 battery condition monitoring software as well as 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 2028.

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

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

Using its far-reaching battery technology know-how, the Korean battery maker — the world’s third-largest EV battery provider —  hopes to lead the solid-state battery market with anodeless products, which exclude 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 for a five-fold increase in revenue in its ESS business by 2028 by leading the US market and becoming a global top 3.

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

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