LG Energy Solution Ltd. (LGES), South Korea's largest battery manufacturer, swung to a net loss of 296.9 billion won (approximately US$221.3 million) in the third quarter ended September 2026, reversing a net profit of 536.1 billion won in the same period a year earlier, as a prolonged downturn in the global electric vehicle (EV) market continued to weigh on the company's bottom line. The results were disclosed in a regulatory filing on Tuesday, 3 November.

Key Financial Results

Despite the net loss, operating profit climbed 25.7 percent to 756 billion won in the July–September quarter, up from 601.3 billion won a year ago. Sales surged 59 percent to 9.64 trillion won from 6.06 trillion won in the year-earlier period — a significant top-line expansion even as profitability remained under pressure.

However, the headline operating profit figure includes a substantial boost from US federal incentives. LGES received 416.9 billion won in tax credits under the Advanced Manufacturing Production Credit (AMPC) programme of the US Inflation Reduction Act. Stripped of that benefit, operating profit stood at a more modest 339.1 billion won for the quarter.

Nine-Month Performance Paints a Harder Picture

For the January–September 2026 period, the company recorded a cumulative net loss of 1.57 trillion won, compared with a net profit of 853.3 billion won in the same stretch a year prior — a dramatic reversal. Operating profit for the nine months fell 54.9 percent to 661.6 billion won from 1.47 trillion won, even as sales rose 26 percent to 23.75 trillion won from 18.84 trillion won. The divergence between revenue growth and profit contraction underscores how margin compression — driven by pricing pressure and higher input costs — is eating into the company's earnings base.

ESS Demand Cushions the EV Blow

LGES credited energy storage system (ESS) demand for partially offsetting the EV weakness. According to the company, 'increased energy storage system (ESS) shipments to North America and sales of mid- and low-priced pouch-type batteries in Europe helped support earnings despite a prolonged slowdown in the EV sector.'

The company currently operates seven battery plants in North America — six in the United States and one in Canada. Five of these produce batteries for both ESS and EV applications, while the remaining two manufacture EV batteries exclusively. LGES also operates joint ventures with Honda Motor Co. in Ohio and General Motors Co. in Tennessee.

LFP Capacity Push and US ESS Market Outlook

Amid growing ESS demand, LGES plans to have more than 50 gigawatt-hours (GWh) of lithium iron phosphate (LFP) battery cell production capacity in North America by end of December 2026. This capacity will span three wholly owned plants — LG Energy Solution Michigan-Lansing, LG Energy Solution Michigan-Holland, and NextStar Energy in Ontario, Canada — plus the two joint venture facilities.

The pivot toward ESS is well-timed: the US ESS market is projected to grow fourfold by 2031, reaching a capacity of 499 GWh, according to market research firm Wood Mackenzie. Battery makers across the industry have been accelerating ESS order pipelines to compensate for sluggish EV battery demand, and LGES appears to be among the more aggressive movers in that direction.

This comes amid a broader industry-wide recalibration, as automakers in the US and Europe have trimmed EV production targets in response to softer consumer uptake. How quickly LGES can scale its ESS business — and whether AMPC credits remain intact under future US legislative conditions — will likely define its financial trajectory over the next several quarters.