New Delhi, Apr 25 (KNN) LG Energy Solution (LGES), a major electric vehicle battery maker, has announced plans to reduce capital expenditure this year in response to a slowdown in global demand for electric vehicles.

The decision comes after LGES reported a 75 per cent decline in operating profit for the first quarter of 2023, totalling just 157 billion won (USD 114 million). Revenue for the quarter reached 6.1 trillion won.

"We plan to adjust our investment priorities in consideration of mid-to-long-term demand and essential expansion in the United States," said LGES Chief Financial Officer Lee Chang-sil during an earnings call, reported TOI.

Previously, LGES had stated that its 2023 capital expenditure would match the 10.9 trillion won invested in 2022. However, the company now intends to minimise spending amid concerns over EV demand.

While LGES expects performance to improve in the second half driven by new electric vehicle models from U.S. customers like GM, it acknowledges potential risks.

These include the upcoming U.S. presidential election and government policies related to the environment.

LGES is also eyeing opportunities for its 46-series cylindrical battery products in more affordable electric vehicles planned by Tesla.

Shares of LGES fell 2 per cent in trading following the earnings announcement, compared to a 1 per cent drop in the benchmark KOSPI index.

(KNN Bureau)