South Korean battery maker company LG Energy Solution (LGES) announced on Monday, October 28, 2024, that it will reduce its capital expenditure next year due to the slowing demand for electric vehicles.
According to Reuters, LGES said that it has a “conservative” view of revenue growth for 2025 after a 39% third-quarter profit drop. The company supplies its batteries to Tesla, General Motors, and Hyundai Motor.
The CFO of LGES forecasted that the results of next week’s US presidential election would also have a significant impact on the market direction of electric vehicles.
Chief Financial Officer Lee Chang-Sil asserted, “Looking ahead to 2025, we see continuing macro uncertainty and geopolitical risk, increased (battery) exports by Chinese rivals, as well as (automaker) customer plans to manufacture their own batteries, which would intensify competition.”
“When it comes to revenue growth next year, we have a rather conservative outlook. We expect capital expenditure to be significantly reduced next year compared to this year, with the exception of some essential and necessary investment," he further added.
LGES said in April 2024 that it is planning to reduce capital expenditure this year, and it would be similar to the previous year's 10.9 trillion won because of the slow growth of EVs.
To note, the demand for EVs is decreasing due to the lack of affordable models, trade tension, the slow proliferation of charging points, and increased competition.
