[Click eStock] LG Chem "Increasing Production Capacity through Joint Ventures with China and the US... Leading the Electric Vehicle Market"

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[Asia Economy Reporter Minwoo Lee] LG Chem is experiencing a series of favorable developments. By establishing a joint venture with General Motors (GM) in the United States and setting up a second production base, it is expected to not only secure a leading position in the North American automotive battery market but also stabilize orders for GM's electric vehicle batteries. The company is also planning to form a joint venture with a Chinese firm and exclusively supply batteries to certain companies. Additionally, increased deliveries due to Tesla's expansion of its China volume are a positive factor.

On the 17th, Kiwoom Securities forecasted that LG Chem will achieve sales of 37.2844 trillion KRW and an operating profit of 1.7297 trillion KRW this year, representing increases of 25.5% and 69.9% respectively compared to last year. This is attributed to the stable securing of battery production capacity and supply channels through joint ventures in the U.S. and China.

The joint venture 'Giga Power' (tentative name), established with GM, has already completed land acquisition. The site is about one-quarter the size of Yeouido, and construction is expected to begin in the first half of this year. The electric vehicle battery plant to be built in Ohio, USA, will involve an investment of 2.7 trillion KRW. With a production capacity of 30 gigawatt-hours (GWh), it can supply batteries for approximately 500,000 electric vehicles. As a result, LG Chem's battery production capacity is expected to increase by more than 100 GWh compared to last year.

This joint venture is seen as a stepping stone for LG Chem to dominate the North American automotive battery market. It is also analyzed that LG Chem will be able to secure stable orders for GM's third-generation electric vehicle batteries while reducing large-scale investment costs. GM has already planned to convert most of its main model, Cadillac, to electric vehicles by 2030. The joint venture is expected to supply batteries not only for Cadillac but also for most of GM's new electric vehicle models, including Chevrolet and GMC.

Penetration into the Chinese market is also expected to accelerate. LG Chem has already established a battery joint venture with the Chinese company Geely and plans to achieve a production capacity of 10 GWh by the end of next year. Dongwook Lee, a researcher at Kiwoom Securities, stated, "Unlike existing Chinese plants in Nanjing, Xinjian, and Binjiang, the joint venture plant is expected to supply batteries only to Geely or Volvo. In addition to the joint venture, the volume supplied to Tesla's Shanghai factory is also expected to increase, which will raise the market share in China."

Kiwoom Securities gave LG Chem a 'Buy' investment rating with a target stock price of 400,000 KRW. The closing price on the previous day was 329,000 KRW.

This content was produced with the assistance of AI translation services.