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As support for electric vehicles wanes in key markets, LG Energy Solution Ltd. — parent company of Windsor’s $6-billion NextStar battery plant — has reported a preliminary first-quarter operating loss.

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But South Korea’s largest battery maker’s early numbers “shouldn’t be a surprise to anyone,” said Sam Fiorani, AutoForecast Solutions vice-president of global vehicle forecasting.

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“It’s expected at this point,” Fiorani told the Star, adding that many other companies overestimated EV demand and scaled up more aggressively than the market could support.

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“A lot of these companies anticipated far more acceptance of electric vehicles than was going to actually happen. They saw the early days of Tesla and said consumers are ready to make this shift, not realizing that Tesla was an anomaly and not necessarily the harbinger of a larger shift.

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“Those numbers were never going to come in the timeframe they needed to happen. We’re seeing that reflected in poor financial reporting by automakers and battery manufacturers.”

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LG Energy, which supplies Tesla, General ​Motors and Hyundai, reported an operating loss of 207.8 billion won ($138.1 million) in the three months ended March 31, according to a regulatory filing Tuesday. That fell short of analyst estimates of a loss of 140.5-billion won (South Korea’s currency).

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Excluding U.S. tax credits for advanced manufacturing, the loss would have been 397.5 billion won, the Seoul-based company said. Revenue fell 2.5% to 6.6 trillion won. Final results are due later this month.

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The cooling sentiment toward EVs — hastened by changes to U.S. emissions policy and the rollback of incentives — became visible in Windsor when NextStar Energy launched full-scale production last November but prioritized in-demand energy storage (ESS) batteries rather than the anticipated EV cells.

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“Batteries are needed in areas other than electric vehicles,” said Fiorani, “and the most nimble of these companies will find an outlet for their products.”

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There was more shuffling around at NextStar in February after LG Energy’s joint venture partner, global automaker Stellantis, announced it would sell its 49 per cent stake back to the South Korean battery maker.

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In the U.S., President Donald Trump’s rollback of EV tax credits and Biden-era fuel economy standards have hit automakers hard, with warnings of revenue and production cuts, as well as scrapped new investments.

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Faced with a murky EV outlook, LG Energy is aggressively pivoting production capacity toward energy storage systems (ESS), with AI-driven data centres having emerged as a fresh revenue stream. The company is converting multiple EV lines to ramp up ESS cell output to at least 60 gigawatt-hours from 36 GWh, targeting at least 90 Gwh in new orders this year.