The weak electric vehicle market in South Korea has led to LG Chem and SK innovation‘s third-quarter earnings expectations are not very good.

Due to the weak chemical and battery business, South Korea‘s chemical and electric vehicle battery manufacturer LG Chemical‘s third-quarter earnings report may be lower than market expectations.

According to the Yonhap News Agency, industry sources said that in the third quarter of this year (July-September), South Korea‘s chemical industry leader LG Chem‘s Operating Income was estimated at 351 billion won (about 296 million US dollars), larger than the same period last year. Decrease by 42%.

LG Chemical‘s third-quarter results were worse than expected, mainly due to South Korea‘s recent ESS energy storage system (Energy Storage System) fire incidents, including LG Chemical‘s ESS products, resulting in sales being suspended for several months.

Lee Do-yeon, an analyst at Korea Investment & Securities, a South Korean brokerage, pointed out that LG Chem’s costs and compensation costs for ESS fire incidents are estimated to exceed 300 billion won.

According to Yahoo Finance‘s quotation, as of 1:45 pm on the 14th, Taipei time, LG Chem (051910.KS) shares rose 0.50% to 304, 000.00 won.

On the other hand, the market generally expects Samsung SDI (Samsung SDI), the second largest battery manufacturer in South Korea, to perform lower than originally estimated. The third quarter operating profit is estimated at 208 billion won, down 14% from the same period last year.

SK Innovation, which is in the electric vehicle battery market, is also the largest refinery in South Korea. The third quarter operating profit is expected to be 335 billion won, a halving from the same period last year. According to industry sources, SK Innovation‘s refining business in the third quarter will be weak, and the inventory loss of inventory in the battery industry will also impact profitability.

According to the Korea Automobile Manufacturers Association (KAMA) announced on September 16, benefiting from strong demand for electric vehicles and recreational vehicles (SUVs), South Korea’s auto exports reached US$2.97 billion in August this year, compared with the same month last year. It grew by 4.6% for the first time in five consecutive months since June 2017, but it has declined compared to June ($3.82 billion).

According to the EV-volumes.com website, global electric vehicle sales in 2012 increased by 64% compared to 2017. Gavin Montgomery, head of research at Wood Mackenzie, an energy consultancy, estimates that by 2025, global electric vehicle sales will account for 7% of overall vehicle sales and further grow to 38% by 2040.