LG Energy Solution, the world's third-largest electric vehicle battery manufacturer, announced plans to diversify its business into areas such as energy storage to mitigate the effects of slowing growth in the electric vehicle market. The company aims to more than double its revenue within five years. In 2022, LG Energy Solution reported a revenue of 33.75 trillion won, approximately 176.9 billion yuan. By 2028, the revenue target is set at 353.8 billion yuan.
CEO Kim Dong-myung emphasized shifting the company's focus from being solely a battery manufacturer to becoming an energy solutions provider centered around energy cycling. The strategic move includes venturing into high-growth potential battery application areas such as energy storage systems, urban air mobility, and marine batteries to build resilience against market fluctuations.
LG Energy Solution faced challenges earlier this year, with a reported loss of about 24 billion won, equivalent to 120 million yuan, in the second quarter, marking its first quarterly loss since its public listing in January 2022. This downturn came as the global electric vehicle market saw growth expectations fall to just over 20% from 36% last year. Several battery manufacturers, including Northvolt and SK On, announced layoffs amid these conditions.
In line with its diversification strategy, LG Energy Solution plans to start large-scale production of energy storage batteries in the U.S. next year, aiming to dominate the market by 2028. It is currently constructing eight battery manufacturing plants in North America and repurposing part of its existing production capacity for energy storage batteries.
The company also plans to expand its battery service businesses, including leasing and recycling, and strengthen its battery management system (BMS) operations. Their BMS technology monitors electric vehicle battery performance and alerts to risks such as fire hazards. A newly developed battery safety diagnostic software, applied to over 100,000 electric vehicles, boasts an accuracy rate of over 90%.
Despite a slowdown in the electric vehicle market, LG Energy Solution aims to combat these challenges through efficient global operations. In the first eight months of the year, it secured a 12.1% share in the global electric vehicle battery market, ranking third behind China's CATL and BYD. However, its market growth rate of 2.5% lags significantly behind these competitors, both of which exceeded 25% growth.
In battery technology, LG Energy Solution is diversifying its product range with a focus on lithium iron phosphate and all-solid-state batteries. Lithium iron phosphate batteries offer cost-effectiveness and high reliability with a lower fire risk, although they have lower energy density compared to ternary batteries. All-solid-state batteries are seen as game-changers for electric vehicles, using solid electrolytes instead of flammable liquid ones. While still in development, multiple companies have begun small-scale production.
LG Energy Solution's strategic shift in technology is driven by increased demand for lithium iron phosphate batteries from Western automakers like Tesla and Ford. In June, the company secured its first major order for these batteries, agreeing to supply Renault's electric vehicle subsidiary with approximately 39 GWh of lithium iron phosphate batteries between late 2025 and 2030, enough to produce 590,000 electric vehicles.
