According to the news of the establishment of a joint venture between LG Electronics and Magna International, there are observations that the LG Group is advancing into the finished car business beyond the consumer electronics, mobile, and telecommunication fields. LG Group, which is in the business of electric vehicle powertrains, batteries, displays, interior and exterior materials, and communication modules, has joined forces with Magna International, which is known to have no parts that can only be made except for tires and windows, and it is evaluated that it has actually opened the way to the finished vehicle consignment manufacturing (EMS) market. Comes out.
On the 23rd, LG Electronics VS Headquarters held a conference call to analysts and institutional investors of domestic and overseas securities companies, and revealed the background and expected effects of establishing a joint venture with Magna. On this day, when asked if LG Electronics could participate in the consignment production business of finished cars like Magna, they said, “The cooperation between the two companies has not yet been materialized. However, it is clear that LG Electronics parts are installed preferentially for motors and inverters.” .
As LG Group has emphasized that it will not manufacture finished cars for years ago, it is unlikely that it will produce and sell cars directly. It is expected to pursue a strategy of cooperating with global automakers and growing into world-class automotive parts and electronics companies such as Robert Bosch and Denso. When LG Electronics launched the VC division (currently the VS business division) in 2013, LG Electronics also disclosed the production site to analysts of domestic securities companies in order to silence rumors of entering the finished car market.
However, the industry is paying attention to the possibility that LG Group will receive orders for consignment production of finished vehicles with Magna from outside, or to sell EV-only platforms such as Hyundai Motor Company’s E-GMP. Starting with LG Electronics, which has the ability to develop electric motors, inverters, and battery management system (BMS), LG Energy Solution (electric vehicle battery), LG Display (display), LG Innotek (vehicle communication module), LG Hausys (vehicle interior and exterior materials), This is because major affiliates such as LG CNS (electric vehicle charging infrastructure) and LG Uplus (autonomous driving communication) are making achievements in the automotive field.
In general, automobiles are assembled and produced with more than 20,000 parts, and are largely divided into’body’, which is used by people or carrying cargo, and’chassis,’ which is a car skeleton. While LG Group is competitive in the chassis of electric vehicles such as electric motors and batteries, Magna is recognized worldwide in the chassis and body of internal combustion engines, which is expected to create synergy between the two companies. Magna produces powertrains, including engines and transmissions, steering, suspension and control devices, electronic equipment, and other devices.
“LG Group’s battery, motor, and inverter technologies are required to create a complete vehicle,” said Ko Tae-bong, head of the research center at Hi Investment & Securities. “In this field, Magna is regarded as one of the world’s best companies.” “LG and Magna “If the power generation system and the power transmission system are divided and combined, it can lead to a platform for exclusive use of electric vehicles.”
Magna, which has partnered with LG Group, is the only parts maker in the world with a comprehensive solution for automobile production. It not only produces various parts by receiving orders from overseas automakers, but also produces auto parts on commission. Over the past 20 years, the company has accumulated 3.7 million vehicles of finished vehicle brands such as Mercedes-Benz, BMW, and Audi while operating finished car factories in Germany, Austria, Slovenia and China.
Magna is recently strengthening cooperation with not only LG Electronics but also various global companies. This year, at CES 2020, the world’s largest home appliance exhibition, they presented the electric vehicle concept car Vision S together with Sony, and last year, they established a joint electric vehicle brand’Arkfox’ with Beijing Motors in China. Recently, it signed a contract for consignment production with American electric vehicle startup Pisker.
In addition, it is expected that LG Group will be able to produce results in the electrified powertrain market, which is emerging as a result of strengthening European environmental regulations. According to the industry, the electrified powertrain market is expected to grow to 36 trillion won by 2025, of which the market for parts makers excluding automakers is expected to reach 20 trillion won.
Lee Hang-gu, a senior member of the Automobile Research Institute, said, “When mobility-sharing companies such as Uber recently announced that they would do vehicle consignment production, we even started bidding for Chrysler in the United States.” “Before LG Group entered the finished car business, we carefully examined business sustainability and production efficiency. You have to review.”
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