The electric vehicle supply chain adds variables, U.S. law enforcement actions raise concerns for Korean companies, LG Energy may delay battery plant production

A large-scale U.S. immigration enforcement action is impacting the investment plans of major South Korean companies in the U.S., raising concerns about the investment outlook for South Korean firms. According to the Global Times report on Monday, U.S. federal law enforcement agencies raided a battery joint venture plant of South Korea's Hyundai Motor and LG Energy in Georgia, detaining 475 people, over 300 of whom are South Korean nationals. Industry insiders stated that this raid is effectively pressuring South Korean companies to hire more American workers. According to CCTV News, South Korean Foreign Minister Park Jin stated on the 6th local time that he would go to Washington if necessary to negotiate directly with U.S. federal authorities on this matter. This sudden incident has disrupted the production rhythm of companies. Media reported on Monday that LG Energy has preliminarily decided to postpone the production start date of its electric vehicle battery plant in Georgia, from the originally planned second half of this year to the first half of next year. Hyundai Motor has also prohibited all employees from traveling to the U.S. for business. South Korean Companies Respond Urgently, LG Energy May Delay Georgia Plant Production Following the U.S. enforcement action, South Korean companies are scrambling to take measures to control the impact. According to South Korean media, LG Energy has preliminarily decided to postpone the production start date of its battery plant in Georgia, which is a joint venture with Hyundai Motor, from the originally planned second half of this year to the first half of next year. The plant's initial target was to achieve an annual battery capacity of 30 gigawatt-hours (GWh), and any delays could affect the electric vehicle production plans of Hyundai Motor and its subsidiary Kia. In response, a spokesperson for LG Energy stated on Monday that due to market conditions, the company had already postponed the production start date to next year, adding that it is too early to determine whether last week's events will affect plant operations. Spokespersons for Hyundai Motor and Kia stated that it is also too early to ascertain any impact on their business in response to related reports. However, companies' vigilance regarding such risks did not begin with this raid. A spokesperson for Samsung Electronics stated that as early as May this year, the company issued internal guidelines regarding the use of short-term ESTA visas for business trips to the U.S., informing employees that travel should not exceed two weeks. Investment Outlook Cast in Shadow An investor expressed deeper concerns. Kang DaeKwun, Chief Investment Officer of Life Asset Management Inc., stated: “This case illustrates how difficult it has become for South Korean companies to make profits from investments in the U.S. Due to inflation, investment returns were already declining, and now companies are facing recruitment challenges.” Despite the shock caused by the incident, the initial reaction of the capital markets has been relatively mild. The stock prices of LG Energy and Hyundai Motor only slightly lagged behind the broader market. LG closed up 0.4%, while Hyundai Motor fell 0.7%. Analysts pointed out that the potential delays for LG Energy have been fully anticipated by the market, and Hyundai Motor has flexibility in adjusting electric vehicle production and seeking other suppliers. ** Anna Lee, an analyst at Yuanta Securities, pointed out in a report that due to the loss of key personnel during the installation and trial production period, it is no longer possible for the factory to achieve mass production in 2026, and she expects a delay of at least one year. However, she also stated that since LG Energy had previously issued warnings about potential production delays, the impact on the company's profitability will be limited