South Korea’s electric vehicle (EV) battery supplier LG Chem Ltd. expected its EV battery sales for next year to jump up to 60 percent from this year, but admitted its rosy prospects hinged on China’s awarding of EV battery certification that would be pivotal to do business in the world’s largest EV market.

“We forecast our EV battery sales that are expected to reach 1.2 trillion won ($1.1 billion) this year will grow by between 30 percent and 60 percent (on year) next year,” Chung Ho-Young, president and chief financial officer of LG Chem on Tuesday said during a conference call to discuss the company’s earnings for the third quarter ended September.

GM’s upcoming all-electric Chevrolet Bolt that will be topped with LG Chem’s EV battery are expected to sell 30,000 units next year, said Chung. He also projected the company’s EV battery production cost to be cut up to 40 percent by 2020 following the company’s heavy research and development spending that has made up around 13 percent of the total sales.

But the success of the battery maker’s EV battery business will depend on the Chinese government’s fifth EV battery certification issuance, Chung said, adding that he expected the China’s Ministry of Industry and Information Technology would embark on the fifth round of qualification review for EV battery makers either late this month or early next month.

The EV battery certification has become a must in EV sales in China, the fast-growing electric car market, after the Chinese government announced it would provide subsidies and incentives to only the EVs equipped with certified batteries starting 2018 in a move to foster use of electric vehicles. Korean makers including LG Chem were disqualified in earlier rounds of issues that mostly were handed out to Chinese companies.

The Korean rechargeable battery maker also projected full-year sales of its large-scale energy storage systems (ESS), separately from the EV battery business, would jump 60 percent from the previous year to record 270 billion won and soar more than 80 percent next year, Chung said.

The company stated in the regulatory filing that it posted 460.9 billion won in operating profit on sales of 5.05 trillion won in the July-September quarter. The third-quarter operating profit fell 15.6 percent from a year ago and 24.7 percent from the previous quarter when it reported 612.5 billion won, the highest profit in 18 quarters. Sales also dropped 2.4 percent on year.

The battery maker’s disappointing third-quarter earnings was mainly attributed to weak demand in its petrochemical sector and poor performance by its IT and electronic materials business, according to the company.

By Jung Wook and Lee Yong-gun

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