Two big news about automobiles led the stock market on the 23rd. It was news that LG Electronics will establish a joint venture in the field of electric vehicle powertrain (power transmission system) with Magna International, the world’s third-largest auto parts maker, and that Apple will start producing autonomous vehicles from 2024.
On the stock market on this day, LG Electronics climbed to the price limit and ended at 110,500 won. LG Electronics recorded the upper limit in about 12 years and 2 months since October 30, 2008. At the time, after the stock price plunged due to the global financial crisis, the high-ranking stocks in the market capitalization recorded the cap at the same time on the news of the conclusion of the Korea-US currency swap. At that time, the price limit was 15%. It was only 2 years and 7 months that LG Electronics exceeded 100,000 won. Based on the closing price, the market cap was 19,5559 billion won, which increased by about 4.5 trillion won in a day, jumping from 23rd to 16th in the market cap ranking.
In addition to LG Electronics, stocks of other LG affiliates such as LG Innotek (12.80%), LG (10.34%), and LG Display (6.41%) surged one after another. The cheering of the market is based on the prospect that the new joint venture will create economies of scale and synergy with the existing business portfolio in the EV parts market.
Founded in 1957, Magna is one of the world’s largest auto parts makers and is the third-largest in the global market in terms of sales last year. In addition to power transmission devices, it produces various automobile parts such as chassis, interior and exterior, and supplies them to automakers. It is evaluated that it possesses not only abundant business experience, but also engineering capabilities such as designing and verifying integrated systems in the field of global customer networks and power transmission systems.
LG Electronics has technology and manufacturing competitiveness for motors and inverters, which are key parts of electric vehicle power transmission systems. 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. According to market research firm IHS Markit, the global eco-friendly car market is expected to grow rapidly from 11 million units last year to 13.3 million units this year and 56.6 million units by 2025. In particular, not only the prospects of the joint venture itself, but also expectations for orders for new customers entering the electric vehicle business such as Apple are growing. Industry analysts say that the establishment of this joint venture is a move with Apple’s supply of’Apple Cars’ in mind.
According to foreign media and industry, it is known that Apple is preparing to launch its own self-driving car with the goal of 2024. Initially, the industry predicted that Apple is more likely to develop autonomous driving systems such as’autopilot’ rather than producing its own vehicles and supply them to automakers. However, as the news that Apple is promoting the production of self-driving electric vehicles is known, the parts industry is paying attention to selecting Apple’s parts maker partner. In particular, Magna has been regarded as a leading company in the manufacturing of Apple cars. In fact, it is known that Magna also held discussions with Apple regarding the production of Apple cars. LG Electronics has also supplied major parts for electric vehicles such as Chevrolet Volt EV and Jaguar I-PACE. Regarding the establishment of this new joint venture, LG Electronics said, “The joint venture can expect new orders from Magna as well as Magna’s customers, so that it can establish a mass production system early and realize economies of scale.” Swami Kotagiri Magna, the next CEO, said, “We look forward to taking advantage of the strengths of both companies to stay ahead in the rapidly emerging electrification parts market.” The market predicts that the parts of the joint venture are likely to be supplied to Apple’s next-generation electric vehicles. Kim Jin-woo, a researcher at Korea Investment & Securities, said, “There are observations that Apple can entrust the production of Apple cars to Magna, and Apple and LG Electronics already have a business relationship. Considering the relationship between Magna, Apple, and LG Electronics, LG Magna It is also possible to supply to Apple cars.”
In the news of Apple’s self-driving car development, smart cars and autonomous driving-related stocks also skyrocketed. Infobank, a mobile solution company, has also increased its price limit. Mando Hyundai Mobis, which makes the’advanced driving assistance system’ (ADAS), also rose sharply on this day. Mando finished the deal at 59,000 won, up 10.07% from the previous day.
[김기철 기자 / 박재영 기자]
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