South Korean battery maker LG Energy Solution Ltd is slowing construction of its third plant with General Motors Co (GM) in Michigan amid lackluster demand for electric vehicles (EVs) and worries about political change in the US.
LG Energy is “adjusting the speed of overall investment” and “seeking ways for the flexible operation” of its plants, the company told Bloomberg News yesterday, but added that it does not mean the company is suspending construction.
LG and General Motors started construction of the facility in 2022, pledging to spend about US$2.6 billion. Operations were supposed to begin in the first half of next year.
Photo: Kim Hong-ji, Reuters
Battery makers globally are suffering from lower sales, as consumer demand for EVs wane. For South Korean companies, the looming US presidential election is another big risk. Many invested heavily in North America after US President Joe Biden’s clean energy bill, which encourages the local manufacturing of EVs and seeks to limit reliance on Chinese players.
Former US president Donald Trump has vowed to take action against the Inflation Reduction Act (IRA) and wind back Biden’s pro-EV policies should he win the election.
Earlier this month, LG CEO 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.
General Motors, which had planned three plants with LG in the US to receive tax credits from the IRA, is walking back expectations for the company’s EV program.
The company would not have production capacity to build 1 million EVs at the end of next year, General Motors CEO Mary Barra said last week.
It is not only LG expressing worries over capital outlays and weakening demand for batteries.
The slowdown marks “a new crisis,” Samsung SDI Co CEO Choi Yoon-ho said earlier this month. Samsung SDI has committed to two plants with Stellantis in Kokomo, Indiana, as well as another with General Motors in the state.
South Korean large cell maker SK On Co has also declared an emergency after generating a big loss in the first quarter.
The company has two plants in Georgia and plans to build another in the state, as part of a joint venture with Hyundai Motor Co.
It also had plans to build three more with Ford Motor Co — 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.
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