Tesla, LG Energy, and the EV Industry Storm: Profits, Politics, and Battery Power Shifts

LG Energy

LG

LG Energy Solution (LGES), the South Korean battery giant and longtime Tesla supplier, has posted a 138% year-over-year surge in operating profit for Q1 2025. The leap to 374.7 billion won ($255M) far surpassed analyst expectations, thanks in large part to U.S. tax credits under the Inflation Reduction Act (IRA). However, if these credits are removed from the equation, LGES actually posted an operating loss of 83 billion won ($56.5M)—a stark contrast highlighting the fragile state of battery demand amid a cooling global EV market.

LGES’s results position it competitively, especially as rivals like China’s CATL feel pressure from both geopolitics and softening EV sales. Meanwhile, its strategic alignment with Tesla and General Motors (GM) has deepened:

LGES is acquiring GM’s entire stake in their joint venture battery plant in Lansing, Michigan.
The JV will now be fully controlled by LGES, adding to its battery facilities in Ohio and Tennessee under the Ultium Cells brand.
LGES has also diversified into robotics, supplying cylindrical battery cells to Bear Robotics in the U.S.

Tesla’s Brand Woes: From Bullish Praise to a Crisis of Perception

Tesla’s stock outlook took a hit after Wedbush Securities analyst Dan Ives slashed the price target from $550 to $315, citing a “full-blown brand crisis.” At the core of the backlash: Elon Musk’s increasing political entanglements and controversial alignment with former President Donald Trump. According to Ives:

Tesla has become a political lightning rod, alienating up to 20% of potential customers in Europe.
The brand damage is “self-inflicted,” and protests, vandalism, and anti-Musk sentiment are growing globally.
Tesla’s 1Q delivery numbers were a “disaster” by all metrics, compounding worries about lost consumer trust.

Despite the negativity, Ives maintains an “Outperform” rating due to potential upsides like:

The rollout of unsupervised Full Self-Driving (FSD) this summer.

– New, lower-cost Tesla models.

Tesla’s strategic resilience in China, although it remains vulnerable to nationalist sentiment and trade tensions.

Tesla’s Safety Score 2.2: More Accurate, Less Controversial

Tesla also released version 2.2 of its Safety Score, used in its insurance program, bringing several refinements:

– Forward Collision Warnings removed, reducing false penalties.

Excessive Speeding and Unsafe Following now have greater impact.
Hard Braking, Aggressive Turning, and Late-Night Driving remain key metrics.

These scores affect insurance rates in 12 U.S. states and are based on over 22 billion miles of driving data.

4680 Battery Milestone: Tesla’s Homegrown Edge

Internally, Tesla celebrated reaching a new cost-efficiency milestone for its in-house 4680 battery cells:

The Texas Gigafactory team now produces the lowest-cost battery cells per kWh.
The milestone, revealed in an all-hands meeting, puts Tesla ahead of its own suppliers, including Panasonic and LGES.
With over 100 million 4680 cells produced to date, the scale is finally hitting profitability milestones, which bodes well for the company’s long-term EV and energy goals.

What Undercode Say:

This moment is a crossroad for both Tesla and the broader EV sector. LG Energy’s profit leap is more of an accounting win than market momentum—without IRA credits, the story flips to loss. That exposes how fragile the current EV economics still are. Battery demand is temperamental, fluctuating with interest rates, consumer confidence, and policy support.

Tesla, on the other hand, is grappling with something harder to fix: brand perception. Elon Musk’s persona has become a double-edged sword. For a decade, his vision lifted Tesla’s image. But in 2025, that same voice is overshadowing the product. In Europe and parts of Asia, Tesla isn’t just a car anymore—it’s a symbol, and not always a welcome one.

From a technical perspective, Tesla remains sharp. Their 4680 battery manufacturing achievement is a massive step toward vertical integration, giving them a competitive moat. But innovation can’t patch up a falling brand image overnight. The drop in price targets from a longtime bull like Dan Ives is less about numbers and more about market psychology.

Analysts are now watching for three key things:

Whether Tesla’s unsupervised FSD rollout brings tangible consumer delight.
If Musk steps back publicly to reorient Tesla as a tech brand, not a political one.
Whether China’s EV market shuts out Tesla in favor of nationalist alternatives like BYD or Nio.

LG Energy’s bet on robotics and acquisition of the GM JV shows how suppliers are hedging against Tesla dependency. For now, battery makers are still surviving thanks to subsidies. But as competition heats up and incentives phase out, the real test begins: who can build batteries cheap, safe, and scaleable—without political drama?

Fact Checker Results:

LGES profit gains are real but dependent on U.S. subsidies.
Tesla’s 4680 battery production milestone has been independently confirmed by execs and third-party analysts.
Wedbush’s Tesla downgrade and Musk’s political influence are backed by multiple investor notes and global media reports.

Stay tuned as Undercode continues to dissect the most disruptive moves across tech and transportation.

References:

Reported By: https://www.teslarati.com/tesla-lg-energy-solution-138-percent-profit-q1-2025/
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