LG Energy Solution Warns of EV Battery Demand Slowdown Amid U.S. Tariffs

South Korea’s LG Energy Solution (LGES) reported a sharp rise in quarterly profit but cautioned about slowing electric vehicle (EV) battery demand due to U.S. tariffs and policy uncertainty. The Tesla, General Motors, and Volkswagen supplier said its April-June operating profit surged to 492 billion won ($359 million), more than doubling from 195 billion won a year earlier and beating the 298 billion won consensus forecast by LSEG SmartEstimate.

The company attributed the jump partly to front-loaded demand, as automakers stockpiled batteries ahead of potential U.S. tariff hikes. However, excluding benefits from the U.S. Inflation Reduction Act (IRA) tax credits, LGES’s profit would have been just 1.4 billion won, highlighting ongoing margin pressures in the EV sector.

Shares of LGES slipped 1.9% following the earnings announcement as investors focused on the firm’s warning of softer demand in the coming quarters. The U.S. recently passed legislation to end federal subsidies for EV purchases starting September 30, intensifying concerns about reduced consumer incentives and slower market growth.

Global automakers, including key LGES clients GM and Tesla, are already preparing for further fallout from U.S. trade policies and waning EV demand. Industry analysts note that the combination of tariffs, subsidy cuts, and rising raw material costs could challenge battery makers’ profitability and slow the transition to electric mobility.

LGES, one of the world’s largest EV battery manufacturers, continues to expand production capacity across key markets, but its outlook remains clouded by shifting U.S. policies and global demand headwinds. Investors will closely watch upcoming quarters for signs of stabilization in EV sales and battery pricing trends.