Why Invest in LG Energy Solution in 2025? Ticker : 373220

 

Company Overview

• Name: LG Energy Solution (KRX: 373220)

• Founded: 2020 (Spin-off from LG Chem)

• Headquarters: Seoul, South Korea

• Main Business: Lithium-ion batteries for electric vehicles (EVs), energy storage systems (ESS), IT devices, and light electric vehicles

• Global Clients: Tesla, GM, Hyundai, Volkswagen, and more

• Production Sites: South Korea, China, the United States, Poland, and others

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Q1 2025 Financial Summary (as of May 8)

• Revenue: KRW 6.3 trillion (+2.2% YoY)

• Operating Profit: KRW 374.7 billion (+138% YoY)

• Net Profit: KRW 226.6 billion (+6.8% YoY)

⚠️ Note: Approximately KRW 457.7 billion in U.S. IRA (Inflation Reduction Act) tax credits significantly boosted the operating profit.
Excluding this one-off gain, the company recorded an operating loss of approximately KRW 83 billion—still a sharp improvement from the previous quarter’s KRW 602.8 billion loss.

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Key Reasons to Invest in LG Energy Solution in 2025

✅ Strategic Strengths

1. Strong Leverage of U.S. IRA Policy
   – Tax credit boosts cash flow and margins for U.S. battery production.

2. Solid Partnerships with Global Automakers
   – Long-term contracts with Tesla, GM, Hyundai ensure stable demand.

3. Diversified Portfolio Expansion
   – Growing business in ESS and next-gen LFP batteries.

4. Global Manufacturing Network
   – Efficiently scaling production across key markets.

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⚠️ Potential Risks

1. EV Demand Slowdown
   – Global demand for EVs has shown signs of stagnation.

2. Investment Cutbacks in 2025
   – LGES reduced annual investment by ~30% due to market uncertainties.

3. U.S. Factory Adjustments
   – Suspended Arizona ESS plant; shifting strategy to Michigan LFP production.

4. Reliance on Tax Benefits
   – Core business profit still needs to recover without subsidy support.

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2025 Outlook: Strategic Shift & Selective Growth

LG Energy Solution is at a turning point—shifting focus from aggressive expansion to strategic optimization. The company aims to strengthen profitability by expanding high-margin ESS businesses and streamlining operations in North America.

For long-term investors, LGES offers:

• A core position in the global battery value chain,

• Resilience backed by innovation and government policy tailwinds,

• And a gradually improving bottom line.

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Conclusion: Is LGES a Buy in 2025?

If you're looking for a mid-to-long-term opportunity in the clean energy and mobility space, LG Energy Solution deserves close attention. While short-term earnings may fluctuate, its role in global electrification is only getting stronger.