LG Energy plans all solid state battery pilot line as it cuts battery capex by 30%

LG Energy Solution is is launching pilot lines for lithium-sulfur all-solid-state batteries and dry electrodes in 2025 at the same time as it cut its capital spending in 2025 by up to 30%.

The slowdown in the European automotive EV market has led to falling sales at the the world’s third largest battery maker and means the company has to consolidates battery chemistries and form factors.

For the full year of 2024, the company reported KRW 25.6 trillion (US%17.49bn, €16.63bn) in consolidated revenue and KRW 575.4 billion ($400m, €380m) in operating profit, a year-on-year decrease of 24.1 percent and 73.4 percent, respectively. The operating profit margin was 2.2 percent, including tax credits from the US Inflation Reduction Act (IRA) to support battery production.

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“Last year, we actively responded to EV demand in North America,” said Chang Sil Lee, CFO of LG Energy Solution. “At the same time, sales in Europe decreased due to slow EV market growth, while average selling price (ASP) also declined because of continued metal price impact, leading to a decrease in our full-year revenue.”

“Although a lower utilization rate led to increased fixed costs and lower profitability, we saw continued improvements in material cost ratio last year,” Lee said.

In 2024, LG Energy prepared for the mass production of its 46-Series cylindrical batteries with a diameter of 46mm and a pilot production line for dry electrodes in Ochang, Korea.

It also started mass production in joint venture plants in the US, Canada, and Indonesia and expanded with new chemistries and form factors for EVs and also expanded its energy storage (ESS) business by accelerating its intake of large-scale power grid projects in North America.

In addition, the company secured access to critical minerals and LFP cathode materials by investing in a lithium mining company.

The global battery market, encompassing the EV, ESS, and IT sectors, is expected to grow by over 20 percent a year from this year, it says. It predicts securing local battery supplies will become ever more critical in response to the higher tariffs on batteries from China set to take effect in 2026.

For the EV market, the company expects its first-mover advantages in the North American battery market to continue to expand, driven by the growing trend of protectionism. At the same time, the increasing volatility of green policies in major countries is expected to decelerate the growth of EV demand in the short term.

The company sees more demand for ESS battery systems for renewable energy infrastructure for energy security as well as for the expansion of AI-driven data centres such as project Stargate in the US.

In 2025 it plans to delay the construction of new plants and use idle production lines within existing facilities for new orders for LFP and high-voltage mid-nickel batteries. It will also diversify the battery form factors that can be built in each facility and convert production lines between EV and ESS batteries.

The company will also focus on enhancing product quality by advancing its BMS diagnostic technologies and AI-based quality management system, expanding its battery as a service (BaaS) and energy-as-a-service (EaaS) businesses.

However it predicts lower prices for its battery systems as a result of low metal prices.