Investing.com — LG Energy Solution Ltd., a key supplier to automakers such as General Motors Co (NYSE:GM)., Tesla (NASDAQ:TSLA) Inc., and Volkswagen AG (OTC:VWAGY), announced plans to significantly reduce its capital expenditure by 20% to 30% this year. The decision comes amid major uncertainties in the global electric vehicle (EV) sector.
The battery maker confirmed an unexpected operating loss of 225.5 billion won ($157 million) for the quarter ending December 31, according to a filing made on Friday. This figure includes 377.3 billion won in tax credits from the United States.
Despite the cut in spending and the recent loss, LG Energy expects a sales rebound this year. The company anticipates a sales increase of 5% to 10% as new assembly lines in North American plants, jointly operated with Honda Motor Co (NYSE:HMC). and Stellantis NV (NYSE:STLA), begin operations.
In addition to ramping up assembly line operations, LG Energy is also planning to launch new products. Among these is a next-generation 46-millimeter cylindrical battery, as stated by Chief Financial Officer Lee Chang-sil.
Speaking about the potential impact of changes in U.S. tariffs and subsidies on the battery industry, Lee Chang-sil said, “The changes 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.”
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