LG Group teams up with GM to develop electric cars

Major global carmakers have accelerated their efforts to gain the upper hand in the eco-friendly “green car” market.

Following the announcement of Toyota Motor and Ford Monday that they will jointly develop hybrid trucks and sports utility vehicles, LG Group also announced Friday its partnership with General Motors to develop electric cars.

○ Changes in partnerships in the automotive industry

Global carmakers that want to develop green cars are forming partnerships to maximize their strengths, reduce research costs, and diversify risks.

Green cars include hybrid vehicles running on both gasoline and electricity, electric cars powered by electric motor, and fuel cell cars using hydrogen and oxygen for power.

The world’s No. 4 automaker Toyota, which began mass production of the world’s first hybrid car Prius in 1997, is unrivaled in hybrid car technology. No. 6 Ford is strong small trucks and SUVs.

The partnership between LG, the world’s leading maker of secondary batteries, and General Motor, the world’s largest automaker, will also generate huge synergistic effects.

Partnerships in the global automotive industry have been formed mainly between carmakers like GM and Daewoo, Nissan and Renault, and Chrysler and Fiat.

In the green car sector in which electric motors and parts play significant roles, however, partnerships between automotive and non-automotive companies will be formed just like the partnership between GM and LG.

Lee Hang-gu, in charge of the main industry team at the Korea Institute for Industrial Economics and Trade, said, “Technological power in the electric, electronic, and communications sectors is essential for green cars,” adding, “Partnerships will be expanded from those between companies in the same type of business to those between companies in different types of businesses.”

Despite the rush toward electric cars, Hyundai Motor Group has acted carefully. It has independently developed hybrid vehicles, such as the Sonata Hybrid, and will pursue its own research on electric and hydrogen-fueled cars for the time being.

A Hyundai source said, “A joint research with Microsoft is underway and Hyundai Mobis and LG Chem have set up the joint venture HL Green Power, but we`re not considering forming additional partnership now.”

○ LG bets all on electric cars

When announcing its teaming up with GM, LG said, “We will foster four growth engines by adding an electric car business to our three growth engine projects of energy, living eco and health care.”

Until recently, LG had considered the electric car business a subunit of the energy sector.

Through the announcement, the conglomerate made it clear that it will concentrate its energy on the electric car business led by LG Chem to make up for poor performances by LG Electronics and LG Display.

LG Electronics, its flagship company, is in a slump due to a belated entrance to the smartphone market and LG Display is suffering from worsening LCD market conditions.

LG Group will stake everything on the electric car business. This is why LG Corp. rather than LG Chem sealed the agreement with GM. Most of LG’s affiliates will work together for the electric car business.

LG Chem will join for batteries, LG Electronics for air-conditioning and ventilation systems, LG Innotek for motors, LG CNS for charging infrastructure, and V-ENS for car parts design.

LG has been in consultations with the Incheon city government to set up a large-scale electric car research center in the port city.

According to an Incheon task force to turn the city into an economic capital, candidates for the site include a high-tech industrial zone in Songdo International City; Cheongna Incheon Hightech Park; and the Seobu Industrial Park in Incheon’s Seo district.

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