Latest news with #USInflationReductionAct
New Straits Times
25-07-2025
- Automotive
- New Straits Times
EV battery firm LG Energy Solution Q2 profit jumps
SEOUL: South Korean battery firm LG Energy Solution's operating profit more than doubled in the second quarter, driven by front-loaded demand as some customers stockpiled batteries ahead of potential US tariffs, the company said on Friday. LGES, which supplies Tesla, General Motors and Volkswagen among other automakers, reported an operating profit of 492 billion won (US$358.73 million) for the April-June period, versus a 195 billion won profit a year earlier. That compared with a 298 billion won average forecast by LSEG SmartEstimate, which is weighted toward analysts who are more consistently accurate. LGES would have made a 1.4 billion won operating profit excluding a tax credit it received under the US Inflation Reduction Act, LGES said in a regulatory filing. LGES Shares were down 1.9 per cent after the earnings announcement. Its customers such as GM and Tesla are bracing for further fallout from US tariffs and an additional slowdown in demand for electric vehicles. The United States passed legislation to end federal subsidies for EV purchases on September 30.
Korea Herald
17-07-2025
- Automotive
- Korea Herald
SK On signs lithium deal with EcoPro to boost IRA compliance
SK On signed a lithium hydroxide supply agreement with EcoPro Innovation on Wednesday, ramping up efforts to strengthen its domestic EV battery supply chain in line with the US Inflation Reduction Act requirements. Under the deal, SK On will receive up to 6,000 metric tons of domestically produced lithium hydroxide by the end of this year, enough to power approximately 100,000 electric vehicles. The lithium will be processed through domestic cathode plants before being shipped to SK On's US battery facilities. Lithium hydroxide, a critical ingredient in nickel-cobalt-manganese cathodes, has traditionally been sourced from overseas, mostly from China. By securing domestic materials, SK On aims to enhance price competitiveness and reduce geopolitical risk. Notably, Korean-made lithium hydroxide qualifies under the IRA's Advanced Manufacturing Production Credit, helping SK On secure tax credits and improve cost efficiency in the US market. EcoPro Innovation CEO Kim Yoon-tae said the deal marks their first lithium hydroxide supply to a global battery maker and will help expand their presence in North America and Europe. 'We're building a stable supply chain amid shifting global policies,' said Park Jong-jin, head of strategic purchasing at SK On. 'Securing competitive materials and diversifying partners will boost our North American capabilities.'
Korea Herald
15-07-2025
- Business
- Korea Herald
Industry minister nominee pushes Korean take on US Inflation Reduction Act
Kim Jung-kwan calls for bold industrial policy to match US, China as tech rivalry intensifies Kim Jung-kwan, the first nominee for industry minister under the Lee Jae Myung administration, has pledged to introduce a production-linked tax incentive system for key industries such as semiconductors and batteries, modeled after the US Inflation Reduction Act. In a written response submitted to the National Assembly ahead of his confirmation hearing this week, Kim emphasized the need for aggressive government support that matches policies implemented by competing nations. 'It is time for strategic and proactive government-led industrial policies, including incentives that do not fall behind those of competing nations, in order to minimize trade risks,' Kim stated. He noted that while semiconductors remain a core pillar of Korea's industrial and economic security, the country's leadership in memory chips is being challenged by Chinese and US firms, and its capabilities in logic chips remain relatively weak. 'We need bold semiconductor policies to strengthen our global leadership and stabilize our domestic manufacturing base,' Kim said, adding that tax and fiscal support for the sector will be expanded. Addressing the battery sector, Kim acknowledged current difficulties stemming from a temporary slowdown in electric vehicle demand and the rapid rise of Chinese competitors. He said the government will consider introducing production tax credits for key minerals and materials to expand incentives for domestic manufacturing and strengthen the battery supply chain. Kim's vision for production tax credits involves a system that offers tax deductions based on production volume, effectively functioning as subsidies linked to output. The US has implemented similar 'Advanced Manufacturing Production Credits' under the IRA to support strategic industries such as batteries, solar panels and clean fuels. In Korea, companies operating in sectors designated as national strategic technologies, such as semiconductors and batteries, are currently eligible for one-time tax credits of up to 25 percent for facility and research and development investments. Unlike these investment-based incentives, Kim's proposed scheme would serve as a more direct benefit by offering tax credits on a portion of production costs. If implemented, leading chipmakers Samsung Electronics and SK hynix are projected to receive annual tax reductions of between 4 trillion won and 5 trillion won ($2.9 billion and $3.6 billion). President Lee had also pledged during his campaign to push for production tax credits of up to 10 percent for semiconductors. After taking office, he reportedly expanded the plan to include the battery sector, initiating internal reviews. In his statement, Kim also vowed to expand the government budget for renewable energy. 'Expanding renewable energy is an urgent task for achieving carbon neutrality, enhancing energy security and creating new growth drivers,' he said, pledging to improve the overall environment for renewable energy deployment including identifying new project sites, securing grid connectivity and increasing public acceptance. At the same time, Kim expressed support for nuclear energy, stressing the importance of a balanced energy mix of carbon-free sources to ensure a stable power supply and meet South Korea's greenhouse gas reduction targets under the Nationally Determined Contribution framework. He also pledged to boost Korea's long-term technological competitiveness by developing Korean-style small modular reactors and next-generation nuclear fuels, while expanding exports of nuclear equipment and supporting small and mid-sized exporters in the sector. On the issue of extended tariff negotiations with the US, set to conclude by Aug. 1, Kim said he would work toward a mutually beneficial outcome and use the talks as an opportunity to develop a bilateral manufacturing cooperation roadmap. 'In the face of US tariff measures and global supply chain shifts, I will do my utmost as Korea's 'export frontrunner' to strengthen our export competitiveness in key industries and open up new markets,' he said. Kim, a former official at the Ministry of Economy and Finance, most recently served as head of marketing at Doosan Enerbility, a major power equipment builder. Since his nomination, he has divested all holdings in companies that could present potential conflicts of interest, including shares in Doosan.
Korea Herald
07-07-2025
- Automotive
- Korea Herald
LG Energy Solution returns to profit in Q2 on strong US demand
LG Energy Solution said Monday that it posted a profit in the second quarter of this year, primarily driven by its stellar performance in electric vehicle and energy storage systems in the North American market. According to the company's preliminary earnings, from April to June, its operating profit skyrocketed 152 percent to 492.2 billion won ($360.5 million), while sales revenue slipped 9.7 percent to 5.56 trillion won from the previous year. This figure marks the first time in six quarters that LG Energy Solution has recorded a profit when not including financial benefits from the Advanced Manufacturing Production Credit outlined in the US Inflation Reduction Act. The company posted an AMPC-excluded profit of 1.4 billion won in the second quarter. 'Several key factors have contributed to the increase in profit, including rising demand for highly profitable battery products from North American clients, local ESS production in North America and ongoing cost-saving efforts,' said an industry source familiar with the matter, on condition of anonymity. LG Energy Solution signed an agreement with the US-based Delta Electronics to supply 4 gigawatt-hour battery cells for ESS applications, enough to power 400,000 US households for a day. The company began mass production of lithium iron phosphate (LFP) pouch cells at its Michigan plant last month, marking the first instance of a global battery manufacturer starting large-scale LFP battery production for ESS within the US. However, the source noted that sales declined during the same period, partly due to conservative inventory management by European automakers and a drop in production volume in China. This adjustment was a strategic move to minimize exposure to US tariffs on Chinese-manufactured ESS products. As part of its cost-reduction strategies, the battery maker decided to suspend the planned ESS investment in Arizona and instead utilize the Michigan plant earlier in the year. In response to a downturn in the global EV industry, the company also acquired a third joint venture plant with General Motors in Michigan to address the EV battery demand initially intended for LG's Michigan facility. 'We are aware of the increased external volatility from major US policy changes, which makes it challenging to predict market demand,' stated LG Energy Solution in a press release. 'However, we consider the initiation of mass production for new battery chemistry products targeting European EVs and the full-scale ESS production in North America as key opportunities to improve our earnings in the latter half of this year.' Industry insiders suggest that the recent passage of Donald Trump's 'One Big Beautiful Bill' is expected to have a limited impact on Korean battery companies such as LG Energy Solution. This is because the AMPC is set to conclude at the end of 2031, only a year earlier than originally planned. On the other hand, the $7,500 consumer tax credit for new EV purchases under the IRA has been accelerated to this September from the end of 2032.
Business Times
07-07-2025
- Automotive
- Business Times
South Korea's LG Energy Solution says Q2 profit likely up 152% on year
[SEOUL] South Korea's LG Energy Solution (LGES), an electric car battery supplier for General Motors and Tesla, on Monday (Jul 7) estimated a 152 per cent rise in its quarterly operating profit. LGES said its operating profit was likely 492 billion won (S$461 million) for the April to June period. That compared with a 195 billion won profit a year earlier and a 294 billion won profit forecast compiled by LSEG SmartEstimate, weighted towards analysts who are more consistently accurate. Analysts said LG Energy Solution's operating profit likely benefited from extra demand by automakers in the second quarter, as many rushed to secure battery cells ahead of potential US tariffs. Automakers were also likely betting on a recovery in sluggish electric vehicle demand, prompting early purchases. The South Korean battery maker said it expected an operating profit of 1.4 billion won in the second quarter, excluding tax credits under the US Inflation Reduction Act. LGES is expected to release detailed results in late July. REUTERS
