LG Energy, GM Adjust US Plant Plans Due To Waning EV Market
LG Energy Solution Ltd., a South Korean battery manufacturer, is slowing down the construction of its third plant with General Motors Co. (NYSE:GM) in Michigan due to weak demand for electric vehicles and concerns over potential political shifts in the U.S.
LG Energy said it is "adjusting the speed of overall investment" and exploring "flexible operation" options for its facilities, according to a message sent to Bloomberg News.
LG Energy and GM commenced the project in 2022 with an investment of approximately $2.6 billion, targeting the first half of next year for operational commencement.
Additionally, Korean firms are apprehensive about the U.S. presidential election, having invested significantly in North America following President Joe Biden's clean energy initiative, which promotes domestic EV production and reduces dependence on Chinese suppliers.
Former President Donald Trump has pledged to dismantle the Inflation Reduction Act and reverse Biden’s pro-EV measures if he returns to office. At last week’s Republican National Convention, Trump promised to "end the electric vehicle mandate on day one."
The Biden administration set a goal for 50% of all new vehicles sold to be electric by 2030.
Earlier this month, LG CEO Kim Dong Myung emphasized the need to adjust investment speeds and urged employees to seek ways to enhance investment flexibility and efficiency.
Meanwhile, GM is also revising its expectations for its EV program. CEO Mary Barra recently stated that the company would not meet its goal of producing one million EVs by the end of next year.
Samsung SDI Co., another major Korean battery maker and supplier for BMW AG (OTC:BMWYY) and Stellantis NV (NYSE:STLA), has highlighted the slowdown as "a new crisis."
The company has two planned plants with Stellantis in Indiana and another with GM in the same state. Similarly, SK On Co., a supplier for Ford Motor Co. (NYSE:F) and Hyundai Motor Co (OTC:HYMTF), has declared an emergency after reporting significant losses in Q1.
Parent company SK Innovation Co. is evaluating options to enhance SK On's competitiveness, including potential restructuring.
SK On has two operational plants in Georgia, with another planned in collaboration with Hyundai. The company also intended to establish three additional plants with Ford—two in Kentucky and one in Tennessee—financed through Biden's administration funds.
However, the start of a second Kentucky facility has been postponed due to slowing EV sales.
A June report from the Korea Institute for Industrial Economics & Trade indicated that Korean battery manufacturers might consider scaling back their U.S. investment plans if the IRA is altered following the US presidential election.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.