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LG Energy Solution: South Korea’s largest battery manufacturer, reported a deeper net loss for the fourth quarter as the global slowdown in electric vehicle demand continued to weigh on performance. Despite some improvement in operating results compared with the same period a year earlier, weaker sales and challenging market conditions kept the company in negative territory.

Quarterly Results Reflect Market Pressures

In a regulatory filing released Thursday, LG Energy Solution said it recorded a net loss of 772.5 billion won, equivalent to about $541 million, for the October–December period. The company remained in the red compared with the same quarter last year, underscoring the prolonged downturn affecting the electric vehicle supply chain.

Operating losses narrowed to 122 billion won during the quarter, improving from a loss of 225.5 billion won a year earlier. Revenue, however, declined by 4.8 percent year on year, reaching 6.14 trillion won, as automakers adjusted production plans in response to slower consumer demand for EVs.

Results Miss Market Expectations

The quarterly net loss significantly exceeded market forecasts. According to data compiled by Yonhap Infomax, the loss was nearly five times higher than the average estimate from analysts surveyed. The gap highlighted the extent to which weaker-than-expected demand and pricing pressures affected profitability toward the end of the year.

Investors have been closely monitoring battery makers’ earnings as EV adoption growth moderates in several major markets, including North America and Europe, following years of rapid expansion.

Impact of U.S. Tax Credits

LG Energy Solution said its results were supported in part by tax incentives from the United States. During the fourth quarter, the company received 332.8 billion won in tax credits through the Advanced Manufacturing Production Credit under the U.S. Inflation Reduction Act.

When excluding the impact of these credits, the company’s operating loss for the quarter widened to 454.8 billion won. The disclosure provided a clearer picture of underlying performance amid ongoing investment in overseas production facilities.

Full-Year Financial Performance

For the full year of 2025, LG Energy Solution reported net income of 80.8 billion won, marking a sharp decline of 76.1 percent compared with the previous year. Annual operating profit, however, rose 133.9 percent to 1.34 trillion won, reflecting cost controls and a shift toward higher-margin products.

Total sales for the year fell 7.6 percent to 23.67 trillion won, mirroring the broader contraction in the global EV market. The company attributed the revenue decline largely to policy changes and reduced incentives that affected electric vehicle demand in key regions.

Strategic Shift Toward Higher Margins

In a statement, the company said changes in government policies and market conditions last year led to a contraction in overall demand, resulting in lower sales. At the same time, management emphasized that a focus on profitability helped lift operating earnings.

LG Energy Solution said its annual operating profit more than doubled as it prioritized the sale of higher-margin batteries and began full-scale production of new energy storage system batteries in North America. The expansion into energy storage was described as a key factor in offsetting weaker EV-related revenue.

Outlook for 2026 Growth

Looking ahead, LG Energy Solution outlined plans to return to stronger growth in 2026. The company said it aims to increase annual sales by 15 to 20 percent by concentrating on small-format batteries and expanding its presence in the energy storage system segment.

The strategy reflects a broader industry shift toward diversification as battery makers seek to balance exposure between electric vehicles, consumer electronics, and grid-scale storage. While near-term market conditions remain challenging, LG Energy Solution indicated that investments in new products and regions are intended to support longer-term stability.