LG Energy Solution (LGES), a South Korean electric car battery supplier for General Motors and Tesla, has projected a 152% increase in its operating profit for the April-June quarter.

The company estimates an operating profit of 492 billion won (US$360.94 million) for this period.

This figure represents a substantial increase from the 195 billion won (US$141.3 million) profit reported during the same quarter last year.

It also exceeds the 294 billion won (US$215.7 million) forecast compiled by LSEG SmartEstimate, which uses data from accurate analysts.

Analysts attribute the profit surge to increased demand from automakers in the second quarter. Many manufacturers reportedly accelerated battery purchases due to potential US tariffs and an anticipated recovery in electric vehicle demand.

LGES indicated that its operating profit, excluding tax credits under the US Inflation Reduction Act, would reach 1.4 billion won (US$1.03 million).

The company is expected to release its detailed financial results later in July.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Battery makers’ profits increasingly dependent on government incentives rather than operations

LGES’s financial reality shows a stark contrast between reported profits with and without tax incentives.

The company would have posted only 1.4 billion won ($1.03 million) in operating profit without U.S. Inflation Reduction Act tax credits, compared to the 492 billion won (US$360.94 million) headline figure.

This reflects LG Energy Solution’s Q1 2025 results, where tax credits contributed 458 billion won to their financial performance, creating an EBITDA margin of 20% despite operational challenges 1.

The trend extends across the industry, with battery manufacturers increasingly relying on government policies rather than operational efficiency for profitability.

This dependence creates vulnerability to policy changes and highlights how battery manufacturing economics remain challenging despite growing demand.

2️⃣ Tariff anticipation creating artificial demand patterns in battery supply chains