[Edaily Reporter JAEMIN SONG ] LG Energy Solution’s domestic and overseas production facility utilization rate rose to 52.8% in the first half of this year. While the utilization rate—which had been on a downward trend in recent years due to slowing demand for electric vehicles—is showing signs of a rebound, driven by the expansion of the energy storage system (ESS) business, research and development (R&D) investment also reached a record high for a half-year period.

According to the semi-annual report released by LG Energy Solution on the 13th, the average capacity utilization rate at its domestic and overseas production facilities for the first half of this year was 52.8%. This represents a 1.5 percentage point increase from the 51.3% recorded in the first half of last year and a 5.2 percentage point rise compared to last year’s annual average of 47.6%.

The production capacity of domestic and international facilities—including Ochang in South Korea, Nanjing in China, Michigan in the U.S., and Wrocław in Poland—totaled 27.954 trillion won in the first half of the year. Actual production for the same period amounted to 14.7597 trillion won. LG Energy Solution calculates production capacity based on actual production output and the average operating rate of each business division.

LG Energy Solution’s average annual capacity utilization rate fell for four consecutive years, from 73.6% in 2022 to 69.3% in 2023, 57.8% in 2024, and 47.6% last year. This decline is attributed to the prolonged global electric vehicle (EV) “chasm” (a temporary stagnation in demand), which led automakers to adjust their EV production plans and, consequently, increased idle production capacity at battery plants.

However, it is believed that the utilization rate has improved this year as EV demand has gradually recovered and the company has continued to convert EV production lines to ESS production. LG Energy Solution is expanding its ESS order intake, particularly in North America, and utilizing existing EV production facilities for ESS production to enhance the operational efficiency of its production facilities. If the upward trend seen in the first half of the year continues, the annual utilization rate could rebound for the first time in five years.

The company also continued to invest in securing future competitiveness. R&D expenses for the first half of this year totaled 725.9 billion won, marking a record high for a half-year period. R&D expenses accounted for 5.1% of revenue. After deducting 130 million won in government subsidies, R&D expenses totaled 725.8 billion won.

The R&D efforts encompass not only next-generation batteries and product safety but also innovations in production processes. LG Energy Solution is developing algorithms to optimize production processes using artificial intelligence (AI) and big data, predict raw material prices, and detect battery anomalies. The company is also advancing the development of intelligent autonomous production technologies, including data-driven virtual instrumentation, quality anomaly detection, and equipment anomaly detection and automatic calibration.

Investment in production facilities also continued. LG Energy Solution spent 2.689 trillion won in the first half of this year on new construction and expansion of production facilities, including buildings and equipment. The company plans to continue making appropriate investments to strengthen its business competitiveness in line with changes in the business environment and market conditions.

Kim Dong-myung, President and CEO of LG Energy Solution, received 811 million won in compensation for the first half of this year. This represents an increase of 9 million won compared to the same period last year. Bonuses, gains from the exercise of stock options, and stock-based compensation were not paid separately.