LG Energy Solution’s cylindrical battery plant in Nanjing, China, has returned to full-capacity operation. With Tesla demand recovering and orders in the Chinese market increasing, industry observers believe the battery sector is showing signs of recovery. According to industry sources on the 21st, LG Energy Solution’s Nanjing cylindrical battery plant has steadily increased its operating rate since the end of last year and has recently been running at nearly full capacity. The market generally believes this is mainly driven by rising demand from Tesla for cylindrical batteries. The industry is closely watching whether Tesla’s global electric vehicle sales, which have declined for two consecutive years, can return to growth this year. Although reductions in U.S. EV subsidies are creating some pressure, improving sales in major markets such as Europe and China, together with rising expectations for autonomous driving technology, are providing support for demand.
Recently, Goldman Sachs raised its forecast for Tesla’s global vehicle deliveries in the second quarter of this year from 405,000 units to 420,000 units. Eugene Investment & Securities expects Tesla’s global EV sales to grow by 8% this year, following declines of 1% in 2024 and 9% in 2025.
In North America, sales may still post negative growth due to changes in subsidy policies. However, sales in Europe and other regions are expected to rise by 38% and 34%, respectively, helping offset weakness in the North American market. In addition, Tesla’s global battery energy storage system (BESS) sales are expected to increase by 18% year on year this year, with the energy storage business emerging as a new growth driver.
Han Byung-hwa, a researcher at Eugene Investment & Securities, said, “Supply volumes to Tesla, including cathode materials, electrolytes, additives, and battery copper foil, are expected to increase significantly. The recovery in EV sales and expansion of the energy storage business have already begun to have a positive impact on the Korean battery industry.” At the same time, recovering demand in the Chinese market is also helping drive the industry’s rebound. Industry analysts believe that, with the value-added tax rebate policy scheduled to end at the end of this year, Chinese automakers are accelerating promotions and shipments, which is also boosting battery orders. The return of the Nanjing plant to full-capacity operation is seen not only as an improvement in utilization rates, but also as a signal of recovering battery demand and improving industry conditions.
In addition, the continued growth in demand for energy storage system (ESS) batteries, driven by the construction of artificial intelligence (AI) data centers and the expansion of power infrastructure, is further strengthening market confidence in the battery industry’s growth prospects.
According to brokerage forecasts compiled over the past month by Yonhap Infomax, a financial information subsidiary of Yonhap News Agency, the market consensus for LG Energy Solution’s operating profit this year stands at KRW 1.1506 trillion, equivalent to approximately RMB 5.1 billion. Following operating profit of KRW 1.3461 trillion last year, the company is expected to maintain annual operating profit above KRW 1 trillion for a second consecutive year.
Han Byung-hwa said, “Judging from current conditions in major downstream industries, Korean battery-related companies have entered a turnaround phase this year and are expected to return to a period of meaningful profit growth starting next year.”
— Source: AJU Business Daily