LG Energy Solution to invest $5.3 bil in 2022 to prepare for future EV demand

South Korean battery maker LG Energy Solution will invest Won 6.3 trillion ($5.3 billion) in capital expenditure in 2022 to prepare for the upcoming boost in global electric-vehicle sales, it said in its fourth-quarter and full-year 2021 results released Feb. 8.

The company said this would be 58% higher than capex in 2021 and would be used to finance capacity expansion at its global manufacturing facilities, including its joint-venture plants with General Motors.

LGES and GM announced in January that their JV company Ultium Cells would invest $2.6 billion on a third 50 GWh battery plant in the US to be located in Lansing, Michigan.

The JV is already building battery cell manufacturing sites in Ohio and Tennessee, with the latter due to start production in 2023.

"In 2022, LGES plans to steadily expand its manufacturing capacity as its major partnering automakers plan to introduce new lineups of electric vehicles," it said.

The company expects to see improved market conditions, as the global chip shortage is due to ease in the second half of 2022, it said.

"LGES will continue to move forward with bold investment plans needed in the long run," LGES CEO Youngsoo Kwon said in the results.

In 2021, LGES reported revenue of Won 17.85 trillion, up 42% year on year, with this expected to rise 8% in 2022 to Won 19.2 trillion due to expected steady growth in the EV market, it said.

Annual operating profit for full-year 2021 was Won 768.5 billion, LGES said, adding that the operating profit margin was 4.3%, due to solid demand for EVs, as well as cylindrical batteries for EVs and light EVs.

However, LGES said revenue and operating profit had been affected by multiple factors, including a voluntary recall with GM for Chevrolet Bolt EV batteries, a recall of batteries for energy storage system and a lump-sum payment of license fee from another industry player.