The battery makers may want to scale back their investment plans for battery plants in the US if there’s any change in the IRA after the US presidenti
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South Korean battery maker LG Energy Solution Ltd. is slowing construction of its third plant with General Motors Co. in Michigan amid lacklustre demand for electric cars and as foreign firms worry about political change in the US.
Seoul-based LG Energy is “adjusting the speed of overall investment” and “seeking ways for the flexible operation” of its plants, according to a text message sent to Bloomberg News Monday. That doesn’t mean the company is suspending construction, it said.
Korea Economic Daily reported the news earlier citing sources it didn’t identify. LG and GM started construction of the facility in 2022, pledging to spend around $2.6 billion. Operations were originally supposed to begin in the first half of next year.
Battery makers globally are suffering from lower sales as consumer demand for electric cars wanes. For Korean companies in particular, the looming US presidential election is another big risk. Many invested heavily in North America after President Joe Biden’s clean energy bill, which encourages the local manufacture of EVs and seeks to limit reliance on Chinese players.
Former President Donald Trump has vowed to take action against the so-called Inflation Reduction Act and wind back Biden’s pro-EV policies should he win the election.
Earlier this month, LG Chief Executive Officer Kim Dong Myung said it was time to adjust the speed of investments, calling on employees to consider ways to increase investment flexibility and efficiency.
GM, which had planned to have three plants with LG in the US in order to receive tax credits from the IRA, is meanwhile walking back expectations for the company’s EV program. CEO Mary Barra said last week that GM won’t have production capacity in place to build one million EVs at the end of next year, which was the previous target.
It’s not only LG expressing worries over capital outlays and weakening demand for batteries.
The slowdown marks “a new crisis,” Yoonho Choi, the CEO of Samsung SDI Co., a supplier for BMW AG and Stellantis NV, said earlier this month. Samsung SDI has committed to two plants with Stellantis in Kokomo, Indiana, as well as another with GM in the state.
South Korea’s third other large cell maker, SK On Co., has also declared an emergency after generating a big loss in the first quarter. It’s a supplier to Ford Motor Co. and Hyundai Motor Co. Parent SK Innovation Co. is considering options to strengthen the competitiveness of SK On, including rolling the unit into other businesses housed under the conglomerate.
SK On has two plants in Georgia and plans another in the state as part of a joint venture with Hyundai. It also had plans to build three more with Ford — two in Kentucky and one in Tennessee — using funds from the Biden administration, but Ford delayed the start of a second Kentucky facility as EV sales slowed.
Korean battery makers may want to scale back their investment plans for battery plants in the US if there’s any change in the IRA after the US presidential election, a June report from the state-run Korea Institute for Industrial Economics & Trade said.
First Published Date: 23 Jul 2024, 06:54 AM IST