LG Energy Solution Ltd. reported preliminary second-quarter operating profit of 113.3 billion won ($74 million), significantly missing analyst estimates of 210.7 billion won. This shortfall stems from sluggish electric vehicle demand in the U.S., which offset strong growth in energy storage systems (ESS).

Despite revenue climbing nearly 25% to 7.6 trillion won, the company's performance was impacted by factors like scaled-back EV tax credits and evolving fuel economy standards in the U.S. This comes as major automakers like Ford Motor Co. reassess their EV strategies, including a $19.5 billion overhaul and the termination of a 9.6 trillion won battery deal with LG.

LG Energy is pivoting to capitalize on the booming ESS market, driven by demand from AI data centers. The company is converting EV production lines to ramp up ESS cell output and has secured significant deals, including a $1.6 billion project with DTE Energy and a $4.3 billion contract for Tesla's energy storage business. Analysts anticipate earnings improvement in the second half as ESS revenue is projected to surge.