LGES unveils revised plans for its Arizona plant amid solid Q3 earnings

LG Energy Solution Michigan [Courtesy of LG Energy Solution]

LG Energy Solution Ltd. (LGES) plans to produce energy-dense 46-series cylindrical battery cells at its Arizona plant in the United States, while also unveiling production details for its cheaper products, such as lithium iron phosphate (LFP) batteries.

The announcements were part of the company’s earnings call for the third quarter of 2023, held on Wednesday. LGES said that it decided to boost the production capacity of its Arizona battery plant to 36 gigawatt hours (GWh) from the previous 27 GWh.

“Global automakers are paying more attention to the 46-Series, which offers energy density five times greater compared with the 2170 battery,” LGES Chief Financial Officer Lee Chang-sil said.

The Korean battery maker had planned to produce the 4680 cells from the end of 2025 onwards. The 4680 battery offers five times greater energy density than the 2170 cells, resulting in a 16 percent increase in driving range.

The company also announced its product portfolio will target the mid- to low-end electric vehicle (EV) segment. According to the company’s plan, it will begin LFP battery production in 2026 instead of the originally planned 2025 and introduce new products utilizing LMFP and manganese-rich batteries with reduced cobalt content in 2027.

The battery maker also plans to boost the energy density of its high-nickel NCMA batteries by increasing the proportion of nickel to over 90 percent while achieving a fast-charging time of less than 15 minutes by adopting high-capacity, high-efficiency silicon anodes.

In the earnings call, LGES said it posted 8.22 trillion won ($6.05 billion) in sales and 731.2 billion won in operating profit for the third quarter, making a 7.5 percent and 40.1 percent year-on-year increase respectively.

Tougher business conditions, however, remain a challenge for the battery maker. Higher interest rates and economic slowdowns saw EV consumption in Europe and China fall, resulting in slower adoption of electrification among some automakers.

“We expect 2024’s sales growth to be relatively modest compared with this year’s, and EV demand could be lower than expectations,” the company said. After the forecast, LGES saw a plunge of 8.7 percent in its stock price from the previous day.