South Korea’s LG Chem, an electric car battery supplier 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.
They had 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.
But expectations are growing for its car battery business as automakers push for more electric vehicles, fueled by Tesla’s rise and tougher emissions regulations in Europe.
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.
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.
Reference- Reuters, Financial Times, LG Chem Newsroom, Business Standard, InsideEVs