LG Chem’s battery business has been officially launched as the wholly-owned “LG Energy Solution”, taking its first independent step as the world‘s batterymaker and overall energy solution provider.
LG Energy Solution will be led by Chief Executive Officer Kim Jong-hyun, whose mission is to almost quadruple the revenue of the battery business to 30 trillion won ($27 billion) by 2024 from the 8.2 trillion won it made last year.
“LG Energy Solution has led the way for South Korea’s battery industry, which was previously nonexistent, with an unyielding determination, and prepared the grounds to create profit through addressing concerns and taking on challenges,” Kim said in his inaugural speech.
“Now, as we step forward to realize an even bigger dream, we have set out on a journey after successfully completing the split.”
He went on to say that LG Energy Solution will be dedicated to developing top-notch technology and quality while promoting an eco-friendly business.
Kim, who joined LG in 1984, spearheaded LG Chem’s small-sized battery business starting in 2009. In 2013, he took the helm of the company’s electric vehicle battery business. Then in 2018, he was promoted to LG Chem’s battery business chief. Under Kim’s management, LG Chem’s battery business revenue spiked from about 700 billion won in 2009 to 8.2 trillion won last year.
LG Chem ranked No.1 in the global EV battery market, commanding a 24.6 percent market share and deploying 19.9 gigawatt-hours of batteries, followed by CATL’s 23.7 percent and 19.1 gigawatt-hours.
LG Energy Solution’s business portfolio is comprised of EV batteries, energy storage systems and small-sized batteries.
With its order backlog standing at 150 trillion won, LG Energy Solution aims to expand its annual production capacity from the current 120 gigawatts to 260 gigawatts by 2023.
As such rapid expansion would require investments worth 3 trillion won to 4 trillion won annually, LG Chem aims to take LG Energy Solution public and sell off a 20-30 percent stake to shore up funds.
Though the exact schedule for the initial public offering hasn’t been decided, LG Chem Chief Financial Officer Cha Dong-seok told shareholders in September that LG Energy Solution is likely to be listed on the stock market in late 2021 or early 2022, adding that the process could take about a year.
However, on top of securing investments, LG Energy Solution faces immediate challenges.
Currently, three automakers, including Hyundai Motor, General Motors and Opel have recalled their EVs loaded with LG Chem batteries upon reports of explosions or fires. The causes of the incidents are under investigation.
While working together with the automakers to solve the issue, LG Energy Solution awaits a final ruling on a trade secret misappropriation lawsuit it had filed against SK Innovation with the US International Trade Commission in April last year.
In February, the USTIC made an initial determination in favor of LG Chem, ruling by default that SK Innovation had infringed LG Chem’s EV battery trade secrets.
A default judgment occurs when a court rules in favor of the plaintiff because of the defendant’s failure to fulfill its responsibilities. In this case, the USITC said SK Innovation had intentionally impaired the investigation by deleting, moving, hiding and altering evidence.
The final ruling will be announced on Dec. 10. The USITC has not reversed its default judgment on a trade secret case in a final ruling since 1996.