By Joyce Lee and Hyunjoo Jin
SEOUL (Reuters) -South Korean battery firm LG Energy Solution (LGES) said on Friday it plans to cut capital expenditure by up to 30% this year on slowing electrical vehicle demand growth, after posting a quarterly loss for the first time in three years.
The company, which makes batteries for Tesla (NASDAQ:TSLA), General Motors (NYSE:GM) and Volkswagen (ETR:VOWG_p), reported an operating loss of 226 billion won ($158 million) for the October-December period.
The result compares with a profit of 338 billion won for the same period a year earlier.
Newly inaugurated U.S. President Donald Trump said this week his administration would consider ending tax credits of $7,500 on EV purchases. LGES said on Friday that scrapping the credits would put downward pressure on the U.S. market.
"The changes in U.S. tariffs and subsides could slow the pace of electrification in the short term, but we believe that there would be no major change in the future direction of the battery industry," LG Energy Solution CFO Lee Chang-sil said during a conference call.
General Motors
LGES said its fourth-quarter earnings were affected by reduced demand from General Motors, which produces batteries with LG Energy in North America for GM cars. Demand from the major customer is expected to recover starting in the second quarter as it launches new models, LGES said.
The company also said it aims to grow its revenue by 5%-10% this year, as joint battery factories with Stellantis (NYSE:STLA) and Honda (NYSE:HMC) start production in North America in the second half of this year.
LGES said that as part of its expenditure cuts it will focus on utilising existing or earlier planned production rather than build new plants in North America.
LGES, which operates joint venture battery plants with GM in Ohio and Tennessee, bought a stake from GM in another battery plant in Lansing, Michigan, in December.
In a New Year message early this month, LG Energy Solution CEO Kim Dong-myung said he expected the EV market would recover after 2026, while also warning of challenges such as the global expansion of Chinese rivals.
Revenue for the past quarter fell 19% from a year earlier to 6.45 trillion won.
Shares of LGES ended flat after the results, versus a 0.9% rise in the benchmark KOSPI.
($1 = 1,430.2000 won)