By Kwanwoo Jun

 

LG Energy Solution Ltd.'s shares climbed Wednesday, tracking the overnight rally in U.S. electric-vehicle making giant Tesla Inc. after a credit-rating upgrade.

Shares of the South Korean EV battery maker closed 5.0% higher at 573,000 won ($439.47) to notch the sharpest daily percentage gain in almost two months, though paring some gains earlier in the session. The stock outperformed the broader benchmark Kospi's 1.2% gain for the day.

The rally in shares of LG Energy Solution, which supplies EV batteries to Tesla, tracked the U.S. auto giant, whose shares surged 7.8% on Nasdaq Tuesday, the sharpest daily percentage gain since Jan. 27, according to FactSet.

Tesla advanced after Moody's Investors Service on Monday lifted its long-term issuer rating on Tesla's debt to Baa3. "The rating action reflects expectation that Tesla will remain one of the foremost manufacturers of battery electric vehicles with an expanding global presence and very high profitability," Moody's said in a statement.

Moody's said it expects Tesla to deliver about 1.8 million vehicles globally in 2023, up 34% from 2022.

Goldman Sachs said in a research note Wednesday that it expects LG Energy Solution and other South Korean battery makers to raise their combined U.S. market share sharply to 57% by 2025, compared with 11% in 2021. It points out that LG Energy Solution's U.S. projects account for 70% of the company's current backlog

South Korean companies are rapidly expanding battery-production capacity in the U.S. after years of localizing the supply chain there to benefit from the Inflation Reduction Act that supports local manufacturers against Chinese exports, the U.S. investment bank said.

Goldman Sachs said it maintains its neutral rating and target price of KRW540,000 for LG Energy Solution.

 

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

 

(END) Dow Jones Newswires

March 22, 2023 04:04 ET (08:04 GMT)

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