Rising North American energy storage battery shipments offset persistent EV market weakness as second-half recovery gains momentum LG Energy Solution’s grid-scale ESS battery containers (LG Energy Solution) LG Energy Solution has returned to profit in the second quarter of this year as rising battery energy storage systems shipments, supported by its expanding production capacity in North America, offset a prolonged downturn in the electric vehicle market.According to the company’s preliminary earnings report on Tuesday, revenue rose 24.8 percent year-on-year to 7.56 trillion won ($5 billion), while operating profit declined 77 percent from a year earlier but rebounded to a profit after posting a loss in the first quarter.When excluding 241 billion won in US Inflation Reduction Act’s production tax credits, revenue came to 7.32 trillion won, and the company posted an operating loss of 127.7 billion won.This marked LG Energy Solution’s first quarterly revenue surpassing the 7 trillion-won mark — excluding IRA tax credits — since the fourth quarter of 2023, signaling a gradual recovery in global market demand.Industry watchers say the sales growth was driven mainly by a surge in ESS shipments as LG Energy Solution expanded production capacity in North America. The company recently began mass production of lithium iron phosphate batteries for ESS at its Michigan plant and plans to increase output through its Ohio joint venture with Honda.Other factors included — steady shipments of mid-priced EV batteries to European customers, resilient demand from strategic customers for cylindrical EV batteries and increased deliveries of its new 46-series cylindrical batteries.Operating profitability also improved despite persistent headwinds in the North American EV market, where weak demand led to temporary production suspensions at some of its US joint venture plants.An industry source said, “Reduced ramp-up costs at the company’s North American ESS facilities, together with increased sales of cylindrical batteries and mid-priced pouch batteries for Europe, contributed to the earnings turnaround.”Analysts predict a stronger earnings rebound for LG Energy Solution in the second half, with rising ESS demand and stabilizing EV battery inventories.Shinhan Securities said the ESS business is entering a new growth phase, forecasting second-half revenue to rise 46 percent from the first half, anchored by a 6 gigawatt-hour supply contract with the US-based DTE Energy. It also anticipates steady earnings improvement on stronger European shipments of mid-nickel and LFP batteries and solid demand for cylindrical batteries.According to NH Investment & Securities, a broader earnings recovery is expected in the second half of the year mainly due to easing weakness in the US EV market, a return to battery restocking by automakers and growing ESS demand.Meanwhile, LG Energy Solution has maintained its full-year revenue growth guidance of 15 to 20 percent.