LG Energy Solution warns of EV demand slowdown amid U.S. tariffs, subsidy end

South Korean battery maker LG Energy Solution (LGES) reported a strong quarterly profit increase but cautioned on Friday about a looming slowdown in electric vehicle (EV) demand expected early next year. The company attributes this anticipated weakness to ongoing U.S. tariffs and the scheduled end of federal EV purchase subsidies on September 30.

LGES highlighted risks that tariffs and subsidy cuts will burden automakers, potentially raising vehicle prices and slowing EV growth in North America. Despite the challenges, LGES plans to boost profits in the latter half of 2025 by expanding battery production for energy storage systems and scaling back or delaying some investments.

Here’s why it matters:

LGES’s warning signals a more challenging sales environment for dealers focused on EVs, especially in the U.S., where tariffs and changes to subsidies could slow consumer adoption and lead to increased vehicle prices. Dealers may face inventory pressure and reduced incentives as automakers adjust to these headwinds. However, the shift toward energy storage solutions presents an emerging market opportunity outside traditional vehicle sales. Understanding these dynamics enables dealers to plan inventory, pricing, and customer outreach effectively in a rapidly evolving EV landscape.

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Key takeaways:

• Quarterly profit more than doubled
  LGES posted an operating profit of 492 billion won ($358.7 million) in Q2 2025, up from 195 billion won a year earlier, helped by U.S. battery production subsidies.
• Demand slowdown expected early next year
  The company warned of softer demand for EV batteries in the U.S. due to tariffs and the expiration of federal EV subsidies on September 30.
• U.S. tariffs and subsidy cuts pressure automakers
  LGES CFO Lee Chang-sil said these factors could increase vehicle prices and slow EV growth in North America.
• Shifting focus to energy storage systems
  To offset the weakness in EV demand, LGES plans to boost production of batteries for energy storage systems and either trim or delay its investment plans.
• Stock reaction
  LGES shares fell 2.3% following the earnings announcement, reflecting investor concerns about future demand risks.