LG Energy Solution Q1 Profit Soars 138% Boosted by U.S. Tax Credits

LG Energy Solution (LGES), a key battery supplier for electric vehicle giants General Motors (NYSE:GM) and Tesla (NASDAQ:TSLA), announced a 138% surge in its first-quarter operating profit on Monday, driven primarily by tax incentives under the U.S. Inflation Reduction Act (IRA).

The South Korean battery maker reported a preliminary operating profit of 374.7 billion won ($255 million) for the January-March period, more than double the 157.3 billion won recorded a year earlier. The figure also far exceeded the 29 billion won average estimate from LSEG SmartEstimate, which favors consistently accurate analysts.

However, when excluding the U.S. IRA tax credits, LGES revealed an operating loss of 83 billion won ($56.5 million), underscoring the ongoing challenges in the EV battery sector amid softening global demand for electric vehicles. The slowdown comes as consumers weigh high vehicle prices and limited charging infrastructure, prompting several automakers to revise EV production plans.

Despite short-term setbacks, LGES remains a vital player in the global EV battery market, supplying key automakers like GM and Tesla. The company’s performance highlights the growing influence of government policies on clean energy industries and the strategic importance of tax credits in offsetting operational losses.

With the EV market facing headwinds, LGES’s ability to outperform expectations thanks to policy-driven incentives reflects the shifting dynamics of the sector. As demand patterns fluctuate, battery makers are increasingly dependent on regulatory support to maintain profitability and sustain long-term growth.

LG Energy Solution’s full earnings report is expected later this month, offering further insight into its performance and market outlook.