LG establishes a joint venture related to electric vehicles with Magna International. It is a condition that LG first divides part of its automotive parts (VS) business division into a subsidiary, and then Magna International (hereinafter, Magna) acquires a 49% stake. The name of the joint venture is LG Magna E-Powertrain (tentative name). It is commonly referred to as LG Magna.
First of all, Magna is an automobile parts maker that has also entered Korea. It is one of the largest companies in Canada and the largest of North American auto parts makers. Therefore, it supplies parts to North American automakers, GM, Ford, FCA (Chrysler), Tesla, as well as European companies such as BMW, Mercedes-Benz, and Volkswagen. In 2019, it ranks third after Bosch and Denso by global standards. In terms of sales, it is second only to Bosch. Most of the sales come from North America and Europe.
There are many parts to be produced in earnest. Chassis, body, trim, aerodynamic design, ESS, powertrain, transmission, ADAS, autonomous driving system, console, lighting, seat system, all-wheel drive system, etc., make and sell most of the car’s needs. In particular, it is known as the first company to create the rear cameras for cars that we use every day.
More importantly, Magna is a company that also manufactures vehicles. Most vehicle manufacturers produce themselves, but if they want to produce a specific vehicle that does not have a line in its subsidiary or lacks production facilities, they can entrust Magna Steyr, a subsidiary of Magna. Magna Steyr can produce between 200,000 and 250,000 vehicles per year. In other words, it is the world’s largest automobile contract manufacturer.
Products produced to date include all E-Class 4Matic models produced from 1996 to 2006 by Mercedes, Golf Country, BMW X3, Chrysler 300C, Jeep Grand Cherokee WH, Peugeot RCZ, Aston Martin Rapids, Mini Paceman, Mini Countryman. And many other vehicles have been manufactured. In particular, parts for four-wheel drive and front-wheel drive have been supplied to Mercedes, Sportage, and Santa Fe.
With both manufacturing and component design capabilities, Magna’s goal is to go deeper into the autonomous vehicle or electric vehicle manufacturing market.
Magna is already producing all parts and modules related to autonomous driving such as lidar and radar, and is also developing related businesses. Therefore, we are also making a solution. Autonomous driving requires that each sensor move organically, and there is a strong point in this area. Magna has been making hybrid concept cars and electric vehicles since 1990, and is showing the MILA EV, Magna’s concept electric vehicle every year at various auto shows. MILA EV is a concept electric vehicle that can be equipped with electric powertrain and plug-in hybrid powertrain. In the 2010s, it manufactures and sells components for electric and hybrid vehicles.
In addition, Magna Steyr was also producing battery packs to respond to electric vehicles such as Ford Electric Focus, but this division was sold to Samsung SDI in 2015.
In other words, Magna is a company that can respond to the demand for most vehicle manufacturing except for battery packs. Why should Magna cooperate with LG?
In an interview with Chosun Biz in 2015, Swamy Kotagiri, former CTO and next CEO of Magna, said in an interview with Chosun Biz, “the consumer electronics sector is becoming more and more important in automobiles.” “How will the future autonomous driving affect the industry?” He said he wants to cooperate with Korean IT companies. The result is a cooperation with LG, which can manufacture batteries directly and is the parent company of the largest electric vehicle battery market (LG Energy Solutions) and also can produce electronic equipment.
Morgan Stanley predicted that Magna would become a Foxconn in the future.
After the merger, the likelihood of the electric vehicle’s Foxconn becoming LG Magna has increased.
Electric vehicle manufacturing is different from finished vehicles with internal combustion engines. The design and production assembly do not have to be done by mass-production car makers. Like a semiconductor designer (fabless), it is theoretically possible to design only and make production differently (an internal combustion engine car is also possible). Therefore, the two companies aim to mass-produce electric vehicle powertrains and realize economies of scale through mass production. Production parts are motors, inverters, vehicle chargers, and entire drive systems. It seems to be considering selling these mass-produced parts, or selling external parts such as powertrains, electronic equipment, and chassis as well. It is reported that Apple’s electric car, which is expected to be released in 2024, is also designed and consigned to manufacture like the current iPhone rather than direct production. LG Magna is headquartered in Incheon and plans to move to Incheon to serve as a division of the Green Business Department and 1,000 related employees.
It’s an impressive merger that enables sales to LG and ultra-high volume production for Magna.
Written. Byline Network
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