[News Article] Hyundai, LG, Samsung to realign EV strategies amid falling demand
Hyundai, LG, Samsung
to realign EV strategies amid falling demand
By Lee Min-hyung, The
Korea Times - Hyundai Motor, LG Energy Solution and Samsung SDI are expected to
realign their respective electrification strategies due to a possible earnings
slowdown triggered by slowing electric vehicle (EV) demand here and abroad,
market analysts and industry officials said Sunday. Korea’s automakers
and battery manufacturers reported solid earnings growth in the third quarter,
but most of them are now bracing for a worst-case scenario due to multiple
external factors such as weakening customer purchasing power, falling lithium
prices and tougher competition with Chinese counterparts. This is forcing
readjustment in business portfolios and strategy to minimize earnings falls by
next year, market insiders said. According to a
recent earnings report, LG Energy Solution, the nation’s largest battery
manufacturer by market capitalization, reported an operating profit of 731.2
billion won ($538.4 million) between July and September, up 40.1 percent from a
year earlier. Hyundai Motor also achieved drastic earnings growth of 146
percent during the same period, reporting an operating profit of 3.82 trillion
won. But they left open
the possibility of weak earnings growth, citing unfavorable and unpredictable
external market circumstances. Last week, Lee Chang-sil, chief financial
officer of LG Energy Solution, said that he expects its earnings growth pace to
slow down next year, as some automakers, such as General Motors and Ford, are
moving to delay their electrification strategy amid falling consumer sentiment. Reflecting on the
pessimistic industrial outlook, market analysts are also revising down target
stock prices of battery firms and automakers here. “LG Energy Solution
is forecast to report weak earnings in the fourth quarter due to falling metal
prices and sluggish demand from its global auto clients,” Jeon Chang-hyun, an
analyst at Daishin Securities, said. The brokerage house cut its target stock price
down to 600,000 won per share, citing the slowdown in EV demand. In a recent
regulatory filing, Hyundai Motor also expressed concerns over uncertain market
circumstances from the fourth quarter. Seo Gang-hyun, executive vice president
at Hyundai Motor’s planning and finance division, said the uncertainty will
prevail. He said the automaker would focus on defending against a possible fall
in its profitability by revamping its product mix. Yuanta Securities
analyst Lee Hyun-soo said the overall change in the EV market will affect
Hyundai’s short-term valuation. “Even if the EV
market is exhibiting double-digit growth, its pace is slowing down,” the
analyst said. “Price competition is also getting tougher. Sales for EVs account
for only a slim portion out of total auto sales, the change in market
circumstance bodes ill for the automakers' valuation.” Source: https://www.koreatimes.co.kr/www/tech/2023/10/419_362088.html
2023.11.01