LG Chem separates battery business as electric cars take off

Officials tour around LG Chem’s car battery plant in the town of Ochang in Cheongwon county, about 100 km south of Seoul. (AFP)
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Updated 18 September 2020

LG Chem separates battery business as electric cars take off

SEOUL: South Korea’s LG Chem, an electric car battery supplier for Tesla and GM, said that it plans to separate its battery business into a new company as the electric vehicle market takes off.

The move came after LG Chem swung to a profit in its car battery business in the latest quarter. It expects further profitability thanks to growing demand from European car makers and more sales of cylindrical batteries used in Tesla cars.

LG Chem, South Korea’s top petrochemicals maker, has long bet on car batteries as a new growth engine, but it has never made an annual profit in the business since it started making them about a decade ago.

But expectations are growing for its car battery business as automakers push for more electric vehicles, fueled by Tesla’s rise and tougher emissions regulations in Europe.

LG Chem said the timing was right to separate the business, which competes with China’s CATL and Japan’s Panasonic, as it has started to make “structural profits” in its car battery business.

LG Chem said the new business, to be launched in December, aims to achieve a revenue of 30 trillion won ($25.5 billion) or more in 2024, from an expected revenue of 13 trillion won this year.

The new wholly owned subsidiary, tentatively named “LG Energy Solutions,” will include LG Chem’s small batteries used in smartphones and laptops and its energy storage systems, as well as its car batteries. LG Chem shares slumped 5.4 percent.

“Many LG Chem investors will only indirectly hold the battery business, which will be separated into a unit,” Daeshin Securities analyst Han Sang-won said.

He also said that investors are also taking profits ahead of Tesla’s battery day, in which Tesla may unveil its advanced battery technologies.

LG Chem said it will consider a stock market listing of the battery unit, without elaborating further.

Making the unit an independent company would also help to attract investments to the business, which requires heavy capital expenditure to expand production capacity as orders pile up, LG Chem said. 


Britain, EU tell each other to move on trade

Updated 20 October 2020

Britain, EU tell each other to move on trade

  • Both sides call on each other to protect billions of dollars of trade between the neighbors

BRUSSELS: Britain and the EU said on Monday the door was still open for a deal on their post-Brexit relationship, calling on each other to compromise to find a way to protect billions of dollars of trade between the neighbors.

With just over two months before Britain ends a status quo transition arrangement with the EU, talks on a trade deal are deadlocked, with neither wanting to move first to offer concessions.

A no-deal finale to Britain’s five-year Brexit drama would disrupt the operations of manufacturers, retailers, farmers and nearly every other sector — just as the economic hit from the coronavirus pandemic worsens.

European Commission Vice President Maros Sefcovic repeated on Monday that the EU still wanted a trade deal but not “at any cost” after British Prime Minister Boris Johnson said on Friday there was no point in continuing talks.

“It has to be a fair agreement for both sides — we are not going to sign an agreement at any cost,” Sefcovic told reporters after meeting Michael Gove, Britain’s point man on the existing divorce agreement, in London.

“The EU is ready to work until the last minute for a good agreement for both parties,” Sefcovic said.

Britain, increasingly frustrated by the EU’s refusal to start text-based talks, called on the bloc to make the first move, with its housing minister saying that Brussels only had to make “some relatively small but important changes.”

Housing Secretary Robert Jenrick called on the EU to “go that extra mile, to come closer to us on the points that remain for discussion.”

A spokesman for Johnson again ruled out prolonging any negotiation beyond the end of this year, when the transition period runs out, saying the EU “must be ready to discuss the detailed legal text of a treaty in all areas with a genuine wish to respect UK sovereignty and independence.”

EU chief negotiator Michel Barnier had been due in London for talks with British counterpart David Frost this week. Instead, they will now speak by telephone on Monday to discuss the structure of future talks, Barnier’s spokesman said.

Negotiations broke down on Thursday, when the EU demanded Britain give ground. Issues still to be resolved include fair competition rules, including state aid and fisheries. EU diplomats and officials cast Johnson’s move as a frantic bid to secure concessions before a last-minute deal was done, and European leaders have asked Barnier to continue talks.

British officials have repeatedly said any deal has to honor Britain’s new status as a sovereign country and not try to tie it to EU rules and regulations.

German Chancellor Angela Merkel said compromises on both sides would be needed. French President Emmanuel Macron said Britain needed a deal more than the 27-nation EU.

Britain is launching a campaign this week urging businesses to step up preparations for a no-deal departure. In a statement accompanying the launch, Gove says: “Make no mistake, there are changes coming in just 75 days and time is running out for businesses to act.”

More than 70 British business groups representing over 7 million workers on Sunday urged politicians to get back to the negotiating table next week and strike a deal.