LG New Energy and GM joint venture four factories, the largest IPO in South Korean history to break the wrist with the Ningde era

On February 3, 2022, according to Yonhap News Agency, GM and LG New Energy plan to establish a fourth battery factory jointly.

GM CEO Mary Bora said that it plans to finalize the location of the fourth plant in the first half of this year, will maintain cooperation with LG New Energy, and recently announced specific plans.

LG new energy sources said that the specific matters have not yet been finalized, but considering the recent rapid development of the global electric vehicle market and the increase in demand for GM's electric vehicles, the two companies are exploring ways to strengthen cooperation such as building a new fourth plant.

On January 25, LG New Energy plans to invest $2.1 billion with General Motors to build a third new battery factory (the first two are located in Ohio and Tennessee), the news has just appeared in the news, and it seems that the negotiations between the two sides have made great progress.

According to public information, South Korea's LG New Energy is an energy enterprise officially established by LG Group in 2020, thanks to the huge resource support of LG Group, LG New Energy has rapidly grown into the world's second largest power battery supplier. Its customers include major automakers such as Tesla, General Motors and Volkswagen.

It is worth mentioning that LG Energy Solutions accounts for more than 20% of the global electric vehicle battery market, has production bases in the United States, China, South Korea, Poland and Indonesia, and is currently working to expand its operations in North America, planning to invest more than 5 trillion won ($4.17 billion) by 2024.

Yiou Automobile believes that LG New Energy will not hesitate to invest heavily in active cooperation with companies in the United States, and is also continuously improving production capacity to prepare for the development of the power battery market after listing.

Judging only from the feedback from the secondary market, Korean investors have given LG New Energy great enthusiasm.

On January 27, LG Energy Solutions Co., Ltd. (LGES) was officially listed on the Korea Exchange. The initial public offering (IPO) price was 300,000 won, and the opening price on the first day rose by 99% to 597,000 won.

On the first day of listing, LG New Energy reported a market value of 118 trillion won, totaling 624 billion yuan, rushing to the second place in South Korea, second only to Samsung Electronics.

The IPO raised nearly $10.8 billion for LG New Energy, the largest IPO ever in South Korea, and globally, LG New Energy has become the second largest IPO in nearly a year, second only to the US star electric car maker Rivian's $12 billion.

LG Energy's record-breaking IPOs are no different from the A-shares landing in the Ningde era in 2018.

Kwon Young-so, CEO of LG New Energy, said bluntly at the Korean media exchange meeting, "We expect that our global market share will surpass that of the Cataline Era and become the world's first." ”

According to data from SNE Research, a South Korean market research agency, from January to November 2021, LG Energy's global power battery installed capacity was 51.5GWh, ranking second in the world, an increase of 90% year-on-year, with a market share of 20.5%, while the data of the ningde era, which ranked first, was 31.8%.

In the Chinese market, LG Energy's installed capacity last year was 6.3GWh, ranking fifth, with a market share of 4%.

At present, the primary competitive target of LG New Energy is the Ningde era, a leading enterprise in the power battery market.

From the performance point of view, the performance forecast released by CATL on January 27 shows that it is expected that the net profit attributable to the mother in 2021 will be about 14 billion yuan - 16.5 billion yuan, an increase of 150.8% - 195.5% year-on-year, reaching the best level of profitability since the establishment of the company.

LG New Energy is in a state of loss in 2019 and 2020, according to the statistics of SK Securities, it is expected that its profit margin in 2021 will be 5.9%, which is about half of the expected value of the CATL era.

From the perspective of technical route, LG New Energy previously focused on ternary lithium batteries, and in 2021, it took the lead in mass production of nickel-reducing tetra-binary lithium batteries (NCMA).

In the Ningde era, ternary and lithium iron phosphate went hand in hand, and structural innovation continued to advance. On July 29 last year, CATL officially released sodium-ion batteries, and said that the first generation of sodium-ion batteries based on a series of breakthroughs in the material system has the advantages of high energy density, high rate charging, excellent thermal stability, good low temperature performance and high integration efficiency.

In the context of less than 10% penetration of global electric vehicles, Yiou Automobile believes that in the short term, the positioning of "one brother" in the Ningde era is still stable, but as more "peers" like LG New Energy put wild hopes into practice, the power battery market competition will become increasingly fierce.