SEOUL, June 29 (Reuters) – South Korean battery maker LG Power Resolution Ltd (LGES) (373220.KS), a serious provider to U.S. carmakers together with Tesla (TSLA.O), is reassessing a $1.3 billion funding plan for a Arizona manufacturing unit citing “unprecedented” financial circumstances.
Information that South Korea’s largest battery maker is reviewing the plan, unveiled solely three months in the past, knocked LGES shares down 4% on Wednesday. It comes as extra companies evaluation enterprise plans, fearing a drop in client demand amid roaring U.S. inflation primarily brought on by international provide chain disruption.
Tesla is chopping 10% of salaried workers and pausing hiring worldwide, and its Chief Govt Elon Musk predicted final week a U.S. recession was extra possible than not. learn extra
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LEGS mentioned in a press release it was presently reviewing varied funding choices as a result of “unprecedented financial circumstances and funding circumstances in america.”
It didn’t point out the Arizona plant, however an LGES spokesperson mentioned the corporate would reevaluate its funding within the standalone manufacturing unit.
Elsewhere in america, LGES is constructing three crops with Normal Motors Co (GM.N) in Ohio, Tennessee and Michigan and plans to broaden its current manufacturing unit in Michigan. learn extra
Analysts attributed the funding evaluation to elevated U.S. inflation, operating at its highest stage in additional than 4 a long time, which may result in rising prices for supplies, development in addition to labour. learn extra
“At this level, it could be unlikely for LGES to withdraw its Arizona funding, the corporate must reassess its profitability forecast amid rising price resulting from inflation,” mentioned Cho Hyun-ryul, an analyst at Samsung Securities.
LGES mentioned in March the Arizona plant can be its first U.S. manufacturing unit to make cylindrical cells, a sort of battery that has been utilized in Tesla and Lucid automobiles. Building was to start within the second quarter of 2022, it mentioned, with mass manufacturing to begin in 2024. learn extra
LGES has additionally manufacturing websites in South Korea, China, Poland, Canada and Indonesia.
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Reporting by Heekyong Yang; Extra reporting by Jihoon Lee; Enhancing by Kenneth Maxwell
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