Tesla supplier LG Chem plans to separate battery business as EV market takes off

Battery-maker LG Chem has said the new business, to be launched in December, aims to achieve a revenue of $25.5 billion or more in 2024.
By : Reuters
| Updated on: 17 Sep 2020, 11:37 AM
An ESB (Electricity Supply Board) electric vehicle charge point is seen in use in Dublin, Ireland, September 3, 2020. REUTERS/Clodagh Kilcoyne (REUTERS)
An ESB (Electricity Supply Board) electric vehicle charge point is seen in use in Dublin, Ireland, September 3, 2020. REUTERS/Clodagh Kilcoyne (REUTERS)
An ESB (Electricity Supply Board) electric vehicle charge point is seen in use in Dublin, Ireland, September 3, 2020. REUTERS/Clodagh Kilcoyne (REUTERS)
An ESB (Electricity Supply Board) electric vehicle charge point is seen in use in Dublin, Ireland, September 3, 2020. REUTERS/Clodagh Kilcoyne

South Korea's LG Chem , an electric car battery supplier for Tesla Inc and GM said on Thursday it plans to separate its battery business into a new company as the electric vehicle market takes off.

The move came after LG Chem swung to a profit in its car battery business in the latest quarter. It expects further profitability thanks to growing demand from European car makers and more sales of cylindrical batteries used in Tesla cars.

Similar Cars

Find More Cars
Tata Tigor Ev (HT Auto photo)
Tata Tigor Ev
Electric | Automatic
₹11.99 - 13.14 Lakhs**Ex-showroom price
Tata Altroz Ev (HT Auto photo)
UPCOMING
Tata Altroz Ev
 
₹12 - 15 Lakhs* *Expected Price
Tata Nexon Ev (HT Auto photo)
Tata Nexon Ev
Electric | Automatic
₹13.99 - 16.85 Lakhs**Ex-showroom price
Tata Nexon Ev Max (HT Auto photo)
Tata Nexon Ev Max
Electric | Automatic
₹17.74 - 19.24 Lakhs**Ex-showroom price
Mg Zs Ev (HT Auto photo)
Mg Zs Ev
Electric | Automatic
₹21 - 24.68 Lakhs**Ex-showroom price
Mg Zs Ev 2022 (HT Auto photo)
Mg Zs Ev 2022
Electric | Automatic
₹21.99 - 25.88 Lakhs**Ex-showroom price

LG Chem, South Korea's top petrochemicals maker, has long bet on car batteries as a new growth engine, but it has never made an annual profit in the business since it started making them about a decade ago.

FOLLOW US:Stay Updated with latest content - Subscribe us on
FOLLOW US:Stay Updated with latest content - Subscribe us on

(Also read: Tesla battery supplier LG Chem expects revenue to double by 2025)

But expectations are growing for its car battery business as automakers push for more electric vehicles, fuelled by Tesla's rise and tougher emissions regulations in Europe.

LG Chem said the timing was right to separate the business, which competes with China's CATL and Japan's Panasonic, as it has started to make "structural profits" in its car battery business.

LG Chem said the new business, to be launched in December, aims to achieve a revenue of 30 trillion won ($25.5 billion) or more in 2024, from an expected revenue of 13 trillion won this year.

The new wholly owned subsidiary, tentatively named "LG Energy Solutions," will include LG Chem's small batteries used in smartphones and laptops and its energy storage systems, as well as its car batteries.

(Also read: Tesla boom supercharges stock of world’s biggest EV battery firm LG Chem)

LG Chem shares slumped 5.4%.

"Many LG Chem investors will only indirectly hold the battery business, which will be separated into a unit," Daeshin Securities analyst Han Sang-won said.

He also said investors are also taking profits ahead of Tesla's battery day, in which Tesla may unveil its advanced battery technologies.

LG Chem said it will consider a stock market listing of the battery unit, without elaborating further.

Making the unit an independent company would also help attract investments to the business, which requires heavy capital expenditure to expand production capacity as orders pile up, LG Chem said.

First Published Date: 17 Sep 2020, 11:37 AM IST
Recommended For You
View All
NEXT ARTICLE BEGINS

Please provide your details to get Personalized Offers on

Choose city
+91 | Choose city
Choose city
Choose city
By clicking VIEW OFFERS you Agree to our Terms and Privacy Policy

Dear Name

Please verify your mobile number.

+91 | Choose city