LG Electronics produces electric vehicle parts in a joint venture with Magna International, Canada, the world’s third largest auto parts maker. It is a determination to grow the electric equipment business into future food.
LG Electronics announced on the 23rd that it has decided to establish’LG Magna E-Powertrain’, a joint corporation in the field of electric vehicle powertrain (power transmission system) with Magna.
■ Launched a joint venture in July of next year following the physical division… Location is Incheon
LG Electronics held an extraordinary board meeting on the 23rd and decided to split the material and establish a joint venture for some of the green businesses in the VS headquarters.
LG Electronics, a spin-off company, will have 100% stake in the new spin-off company through the physical split, and Magna will take over 49% of the spin-off company. The acquisition amount is 435 million dollars (about 516 billion won).
The joint venture will be officially launched around July when approval for the physical division and establishment of a joint venture is approved at the general shareholders’ meeting scheduled for March next year.
The head office is located in Incheon, Korea, and 1,000 employees related to some of the green projects are expected to move to the joint venture. Some of the divided green businesses include motors, inverters, and vehicle chargers for electric vehicles, as well as drive systems (modular products with motors, inverters, and reducers).
Magna, a mobility technology company, was founded in 1957. It is one of the world’s largest auto parts makers, and ranked third in the world in terms of sales last year. In addition to the power train, it produces various automobile parts such as chassis, interior and exterior, and supplies them to finished car companies. Its headquarters are in Ontario, Canada.
■ “Active utilization of LG Electronics’ manufacturing technology and Magna’s rich experience”
Magna has a wealth of business experience and engineering capabilities, including the design and verification of integrated systems in the powertrain field, including a global customer network. In addition, LG Electronics has technology and manufacturing competitiveness for motors and inverters, which are key parts of electric vehicle powertrains.
LG Electronics and Magna expect that the strengths of both companies will create the best synergy and contribute to the advancement of the business of the joint venture in a situation where the eco-friendly vehicle and electrification parts market is growing rapidly.
The joint venture will be able to expect new orders from Magna as well as from Magna’s customers, thereby establishing a mass production system early and realizing economies of scale.
Previously, LG Electronics was recognized for its technological prowess by supplying major parts for electric vehicles such as Chevrolet Volt EV and Jaguar I-PACE.
“The joint venture will lead the upcoming electric vehicle era by actively utilizing LG Electronics’ outstanding manufacturing technology, Magna’s rich experience, and global customer network, as well as enhancing the competitiveness of the auto parts business,” said Jin-yong Kim, Vice President of LG Electronics’ VS Business Division. “I emphasized.
■ VS Business Division·ZKW·LG Magna joint venture…LG completes 3 axes of auto parts business
LG Electronics established the VS (Vehicle Components Solutions) business headquarters in 2013 to foster the auto parts business as a future growth engine and cash cow. In August 2018, it acquired ZKW, an Austrian automotive premium headlamp company.
ZKW possesses the world’s first mass production of premium headlamps equipped with next-generation light sources such as high-brightness LED daytime running lamps and laser headlamps. Currently, it is supplying premium headlamps to premium automakers such as BMW, Benz, Audi, and Porsche. It is ranked 5th in the world in the premium headlamp market by production volume.
At the end of 2019, LG Electronics transferred the vehicle lamp business within the VS business division to ZKW and integrated it.
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Starting from the inauguration of the joint venture, LG Electronics will promote the auto parts business by dividing into three axes: VS Business Headquarters (focus on infotainment), ZKW (Lamp), and LG Magna e-Powertrain (Powertrain). All of these results are added to the VS division’s consolidated sales and operating profit.
Meanwhile, LG Electronics’ stock price surged in the news of the day. According to the Korea Exchange, as of 1:30 p.m., LG Electronics is trading at 119500 won, up 30% from the previous day.