South Korean battery maker LGES pauses some part of U.S. battery plant construction
SEOUL, June 28 (Reuters) -LG Energy Solution (LGES) 373220.KS has paused part of construction of its multi-billion dollar battery factory in the U.S. state of Arizona due to changing environment of battery market, the company said on Friday.
The South Korean battery maker, which supplies automakers including Tesla TSLA.O, General Motors GM.N, Hyundai Motor 005380.KS among others, said it has suspended the construction of its energy storage system (ESS) battery production facility in Arizona as it adjusts the pace of planned investment execution flexibly to optimize its operations.
The Arizona facility, which consists of two facilities - one for cylindrical batteries for electric vehicles (EVs) and lithium iron phosphate (LFP) pouch-type batteries for ESS.
LGES said it would spend 7.2 trillion won ($5.21 billion) on its Arizona facility with planned production in 2026.
"As part of such efforts, we are temporarily putting the construction of Arizona ESS battery facility on hold. We still believe the facility will play an important role in our North America operations as we expect continued growth in the U.S. ESS market. Meanwhile, the construction of cylindrical EV battery facility is ongoing as planned," LG Energy Solution said in a statement.
The company added it has not yet decided when to resume the construction of its ESS factory.
Analysts noted the current trend of slowing global EV demand has attributed to LGES' decision to temporarily halt the ESS production site as the company finds ways to minimize cost.
In April, LGES reported a 75% plunge in the first quarter profit, booking a 32 billion won operating loss without a tax credit received under the U.S. Inflation Reduction Act.
($1 = 1,381.8300 won)
Reporting by Heekyong Yang; Editing by Lincoln Feast.
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