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LG Chem significantly fell behind its 2020 target

Large  Small Date:2020-03-09  From:ICC
Note: According to latest news from Korean media, LG Chem suspended spinning off battery business.
According to latest news from Korean media, LG Chem suspended spinning off battery business. LG Chem person said on 8th: "The battery unit's independent plan was actually postponed indefinitely. Last week, after a meeting with senior management, we reached the conclusion that" it's expected that it will be difficult to obtain real benefits. "
According to ICCSINO, LG Chem produced 40GWh and applied 80KMT of cathode materials, in which LG Chem installed 12GWh vehicle batteries in 2019 and accounted for 11.5% in global total vehicle batteries in 2019. LG Chem was reported that their target in 2020 is to realize 110GWh. Previously in order to realize its target, LG Chem has been devoting itself to expanding production capacity in Poland and Nanjing, China. Furthermore, in order to keep the stability of raw materials, LG Chem has established contracts with many raw material enterprises including POSCO, Umicore, whose contracts involve totally 240KMT NCM supply.
Whereas affected by coronavirus 19 and frequent explosion accidents, LG Chem is concerned that the market's expectations for the battery business will be shattered during the IPO process. According to ICCSINO, Tesla sold 3898 units of Model 3 for its Shanghai factory and LG Chem only supplied 77.52MWh NCM 811 batteries to Tesla in February 2020, which only takes up around 10% of its original targets. Obviously based on current weakening EV sales, it's difficult for LG Chem to realize its target. Nevertheless, frequent ESS explosion happened recently, which made LG Chem’s battery security performance questioned.

Therefore, relevant persons said: "If IPO of LG Chem’s battery business was carried out, LG Chem's problems will be truthfully disclosed, which might cause market value decline."

During the electrification process and under the COVID19 spread, many problems encountered worldwide. Governments are paying more attention on lithium ion market worldwide. According to news on 9th March, Korean government tried to strengthen the field and proposed provisions on improving renewable energy market, in which longest lease period of Korean common property of the renewable energy business is 30 years. Obviously, this is good news for lithium ion market especially for ESS. ICCSINO would continue to track the latest global lithium ion dynamics and report to you.


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