LG Chem accelerates investment in EV batteries

South Korea's LG Chem is increasing its investment in its battery operations with it potentially overtaking petrochemicals as its largest source of revenue amid rising demand for electric vehicles (EVs).

The company said it plans to invest 13 trillion won ($11bn) in its energy solutions unit, including W10 trillion in its EV battery segment, over the next four years. The unit is taking up half of LG Chem's overall W6.2 trillion capital budget in 2019, even though it accounted for just 22pc of revenue last year.

LG Chem sees batteries doubling its revenue to W59 trillion by 2024 when battery sales are projected to rise nearly fivefold to W31.6 trillion, or 54pc of total company revenue.

LG Chem, which plans to triple its EV battery production capacity to as much as 110GWh by the end of 2020, will likely need around 170GWh in 2024 to meet its growth target. New plants are under development in China and Poland, and LG Chem may build a second US factory to go with its operation in Michigan as orders from EV producers grow.

The energy solutions unit swung to a second-quarter loss of W128bn from a year-earlier profit of W27bn on costs related to expansion and a spate of energy storage system (ESS) fires. The unit had combined losses of W276bn in this year's first half, but LG Chem said its sees profitability restored over the rest of 2019 as sales increase across all segments and productivity is stabilised.

LG Chem is working to strengthen its supply lines for battery materials. This will include expanding the company's in-house production of anode materials, while LG Chem aims to produce about 40pc of the cathode materials that will be needed for its battery business.