By Irina Slav of OilPrice.com

LG Energy, one of the biggest players in the EV battery space, reported a 58% drop in operating profits for the second quarter of the year, attributing the figure to the slowdown in EV sales.

The news came a day after another South Korean battery major, SK On, declared an emergency after 10 consecutive quarters of losses stemming from trends in EV demand that have missed analyst and company expectations.

LG Energy and SK On are, respectively, the world’s third- and fourth-largest EV battery manufacturers.

Reporting on the LG Energy results, which are preliminary, Bloomberg noted a tax credit under the U.S. Inflation Reduction Act that helped the company stay in the black, Excluding that credit, LG Energy dipped into an operating loss of some $180,000.

SK On, for its part, has had worse luck than its bigger rival, without IRA tax credits to help it through the rough times. The Financial Times reported on Sunday that the company had seen its net debt swell to about $10 billion over the last two years and a half, which was a fivefold increase in the period. The reason: EV sales have fallen short of projections—well short.

“We have our back against the wall,” chief executive Lee Seok-hee wrote in a letter to employees. “We should all pull together.”

The company appears to have made a string of sub-optimal decisions to get to this point, namely aggressive investments in Europe and the United States in anticipation of an EV boom, according to the Financial Times.

Unlike the South Korean battery makers, the two world leaders—BYD and CATL—are mostly exposed to their home market where EV sales are the strongest in the world, so they have been shielded by the disappointing sales numbers on the other two key markets for the vehicles.