Magna is also considered an Apple car production partner…It can also supply motors to’Apple Cars’
Nested in Incheon and produced electric vehicle motors, inverters, and drive systems
Targeting New Markets with Infotainment, Lamp, and Powertrain Triangular System
[FE금융경제신문=권경희 기자] LG Electronics establishes a joint venture with Canada’s Magna International, the world’s third-largest auto parts maker, to manufacture auto parts. It is expected that momentum will be gained in LG Electronics’ automotive electronics business, which has set a goal of’turn to the black’ by next year.
According to Bloomberg on the 23rd, LG Electronics and Magna International (Magna) decided to invest 51% and 49%, respectively, to establish a joint venture (JV) LG Magna ePowertrain (tentative name). The total investment amount of the two companies is 1 billion dollars (about 1.1 trillion won). A joint venture between LG Electronics and Magna plans to produce electric vehicle (EV) motors, inverters (devices that control electric vehicle motors), and electric driving systems in Incheon and Nanjing, China.
LG Electronics held an extraordinary board meeting on the 23rd and decided to establish a joint corporation by dividing the business of electric vehicle motors and driving systems within the Electronic Components (VS) Division. The joint venture will be officially launched in July when approval for the split-off and establishment of a joint venture is approved at the general shareholders’ meeting scheduled for March next year. The headquarters will be located in Incheon, and over 1,000 employees related to the division will be moved to a joint venture. When the joint venture is launched next year, LG Electronics’ auto parts business will be reorganized into a three-part system: the VS business headquarters centered on infotainment, ZKW, which is a lamp business, and a powertrain-oriented joint venture.
Through the official press release that day, Jin-yong Kim, Vice President of LG Electronics’ VS Business Division, said, “The joint venture will lead the upcoming electric vehicle era by actively utilizing LG Electronics’ outstanding manufacturing technology, Magna’s rich experience, and customer network. It will increase its competitiveness.”
LG Electronics has entered the automotive electronics business since 2013. Despite having suffered a deficit for several years, it continued to invest two years ago, such as acquiring the automotive lighting company ZKW in Austria. To the GM electric vehicle’Volt’, 11 kinds of core parts, including instrument panels and driving parts, were supplied. Last month, it was also selected as an’excellent supplier of vehicle displays in the innovation sector’ by French automaker Renault.
Headquartered in Aurora, Ontario, Canada, Magna is the world’s third-largest auto parts company in terms of sales. It is also in charge of consignment production of finished cars such as BMW and Volkswagen Skoda. In the parts industry, Magna is selected as a leading company to participate in the manufacture of Apple cars. This is because even if Apple launches an electric car, it does not plan to manufacture it directly.
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. Swami Kotagiri Magna, the next CEO, said, “I look forward to taking advantage of the strengths of both companies to take the lead in the rapidly emerging electric component market.” Kim Jin-yong, vice president of LG Electronics’ VS Business Division, also said, “In order to lead the global market in the electrified parts business with unlimited possibilities and growth opportunities, we made the best choice while boldly.”
With the establishment of a joint venture with Magna, LG Electronics’ electronic electronics business is expected to turn to the black. LG Electronics’ VS Business Division recorded an operating loss of 66.2 billion won in sales of 1.655.4 billion won in the third quarter of this year. Annual operating loss this year is expected to be around 400 billion won. However, in the securities industry, the VS business division is expected to succeed in turning profitable with increasing orders for high-margin electric vehicle parts next year. Chairman Koo’s decision to make bold investments to grow the electric electronics business as a future growth engine will come to fruition.
As news of the promotion of a joint venture with a global electronics company became known, LG Electronics’ stock price rose sharply. On this day, LG Electronics’ share price rose more than 29% compared to the previous day, exceeding KRW 110,000. If the electronics division turns to a surplus along with the home appliance division, the biggest strength, the company’s overall earnings are also positive.
Reporter Kwon Kyung-hee [email protected]
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