According to foreign media reports, South Korean company LG Energy Solution said on April 26 that the company's profit more than doubled in the first quarter of this year thanks to subsidies from the US Inflation Reduction Act (IRA) and the steady improvement in US electric vehicle sales.
LG Energy Solution, which supplies companies such as Tesla and General Motors, said it has received requests from major automaker customers for increased battery supplies since the IRA took effect, which could bring it more orders.
LG Energy Solution reported that its operating profit was 633 billion won ($472.6 million) in the first quarter of this year, up 145% from 259 billion won in the same period last year. This level was in line with the average analyst forecast of 633 billion won collected by Refinitiv SmartEstimate.
Analysts said the jump in LG Energy Solution profits was attributed to a steady rise in electric vehicle sales in the US. In the US market, EV consumers can receive a tax credit of up to $7,500 under IRA rules.
LG Energy Solution said in a regulatory filing that its revenue also doubled to 8.7 trillion won in the first quarter of this year. The company said its sales revenue should remain stable in the second quarter, despite the impact of metal prices.
LG Energy Solution said revenue in the second half of the year could fall with changes in metal prices as it enters into contracts with customers with "cost pass-through" clauses to manage material costs, but the impact on profit margins will be limited.
When asked about efforts by Chinese competitors to enter the US market, LG Energy Solution Chief Financial Officer Lee Chang-sil said the company will maintain its competitive position in the US. He cited the IRA, which aims to free the US from dependence on Chinese electric vehicle battery components, saying the act is one of LG Energy Solution's strengths.
