South Korean battery maker LG Energy Solution (LGES) on Friday predicted slowing growth in the global electric vehicle (EV) market this year, signalling further challenges ahead amid intensifying competition from Chinese rivals.

The supplier of Tesla, General Motors, Volkswagen and other car makers reported operating profit of 338-billion won (about R4.76bn) for the October-December period, up from 237-billion won (R3.35bn) a year earlier.

The profit is in line with a company forecast of 338-billionn won, but it exceeds an estimate of 298-billion won (R4.21bn) compiled by LGES SmartEstimate, which is weighted toward analysts who are more consistently accurate.

Fourth-quarter profit, however, dropped more than half from the previous quarter due to weak demand for electric vehicles in Europe.

“A temporary slowdown of global EV battery demand growth is expected due to original equipment manufacturers’ [OEMs’] conservative inventory control along with continued metal price decline,” LGES said. OEM here refers to automakers.Risk factors this year would be the changing pace of EV transition plans by automakers, growing competition in Europe as well as political uncertainties, including the US presidential election, LGES said.

LGES’ forecast for this year’s market outlook comes after its automaker customer Tesla warned on Wednesday of a sharp slowdown this year in sales growth for its cars.

On Thursday, Hyundai also flagged the slowing of EV market sentiment.

“The global EV market would grow by mid-20% range this year, affected by several factors, including the North American market growth forecasted to stand at low to mid 30% range,” LGES said.

It said it is targeting revenue growth at a mid-single percentage this year, and this year’s capital expenditure would be similar to last year’s 10.9-trillion won (R154.02bn).

LGES said the estimated battery production capacity eligible for US inflation reduction act tax credits this year would be around 45-50 gigawatt hour, more than double the previous year.