LG Energy Solution reports an operating profit of 492 billion won for the April-June period.
South Korea’s LG Energy Solution (LGES), the second largest producer of EV batteries and supplier to General Motors and Tesla, reported a 152% increase in its quarterly operating profit to $361 million on Monday, despite a 9.7% decline in revenue to $4.1 billion.
A situation where revenue is declining but operating profit predicts a shocking increase indicates a crucial aspect of the EV supply chain. Automakers are actively stocking up batteries in anticipation of US tariffs, despite ongoing price challenges and uncertain demand.
LG Energy Solution’s results indicate a strong opportunity in battery supply chains for investors, although concerns are associated with government retaliation and uneven EV adoption.
LGES reports that an operating profit for the April-June period was probably 492 billion won ($360.94 million).
That contrasted with a profit of 195 billion won the previous year and a profit forecast of 294 billion won compiled by LSEG SmartEstimate, weighted towards analysts who are consistently accurate.
Analysts said that LGES’ operating profit could rise exponentially due to increased demand from automakers in the second quarter, and many scrambled to get battery cells ahead of possible US tariffs. Automakers were also betting on a recovery in a weak market for electric vehicles, prompting early sales.
Its profit exploded all thanks to automakers like General Motors and Tesla. The “just in case” purchase boosted its sales volume.
Second, the US Inflation Reduction Act (IRA) provided them with tax credits, which added $458 million to their Q2 profits. Or else, its operating income would have dropped to $1 million.
The revenue decline mirrors a deeper industry issue. While EV demand remains weak, automakers have focused on acquiring limited battery cells for volume sales. For example, even though its US EV sales increased 94% annually, General Motors cut its 2025 sales target due to supply chain uncertainty.
The conflict between the automaker’s preparedness and the market reality will determine the battery industry’s profitability.
There are several reasons for margins expanding despite lower revenue. It concentrated on high-return projects, including dry electrode technology, which lowered its production waste, and capital expenditure was reduced by 30% in 2025.
The company paused the energy storage factory in Arizona to reallocate resources to its Michigan factory to increase production of lithium-iron-phosphate (LFP) batteries. This change reduced its dependence on Chinese imports and enabled LGEs to get $13 billion in IRA tax credits by 2030.
The company offset the weak EV demand by a 4GWh residential agreement with Delta Electronics and a 10GWh order for grid-scale batteries.
Investors need to be prepared for turbulence as the US may finalise tariffs on Chinese-made batteries as early as Q4 2025, disrupting automaker procurement. When the IRA limits on Chinese imports lapse, Chinese rivals like CATL will secure North American supply chains after 2026.
The South Korean Won depreciated 8.5% against the dollar, and a 30% decline in lithium prices is straining the margins. The solution for the company is to invest in US lithium mines to cut costs and get lithium spodumene from Australian suppliers.
The Q2 findings from LGES support a core theory: battery supply chains are a choke point for EV adoption. Automakers cannot produce EVs without cells, and LGES has pricing power because of its 25% global market share and customer base with GM, Tesla, and Ford.
Despite these dips, investors can see buying opportunities. Reports show that global EV sales would triple to 45 million by 2030, despite short-term threats, including tariff delays and weak EV demand. LGES will benefit from its IRA-optimized manufacturing, reaching 35GWh of capacity by 2026.
LGES will release detailed results in late July. LGES Q2 earnings spike shows structural demand in the EV battery market, not just a quarterly lapse.
The message is clear for the time being: LGES is at the forefront, the IRA is here to stay, and automakers are stocking batteries.