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LG to enter EV parts business with Magna International

Posted December. 24, 2020 07:29,   

Updated December. 24, 2020 07:29


LG Electronics will enter the key parts business for electric vehicles by setting up a joint venture to manufacture the powertrain for electric vehicles with Magna International, the world’s No. 3 auto parts company. With the agreement, LG Group has now secured future business areas, from batteries to key parts of electric vehicles. LG Electronics’ stock price went up 29.61 percent on Wednesday, hitting the upper limit for the first time in 12 years.

LG Electronics plans to grow auto parts and electronics businesses with a focus on the powertrain, infotainment, and premium headlamp by establishing a joint venture. It will create synergy with other subsidiaries of LG in terms of batteries and parts for vehicle communication. Some say that future cars are now the main growth driver of LG.

The joint venture tentatively named LG Magna ePowertrain will be established by LG Electronics setting up a new company through physical division followed by Magna International purchasing 49 percent of the new company at 453 million dollars.

The agreement between LG Electronics and Magna International came to quickly dominate the powertrain segment of the fast-growing electric vehicle market. Magna International produced various auto parts, including powertrain, chassis, and interior and exterior parts, as the world’s No. 3 auto parts manufacturer. The company joined hands with LG Electronics, which has outstanding technology capabilities in the electric vehicle motor and inverter, to continue its competitiveness in auto parts for the internal combustion engine market.

With the agreement, LG Electronics is expected to obtain powertrain design capabilities and build a mass-production system early by connecting with Magna International’s global car customer network. Magna International is mentioned as a leading candidate as a partner of Apple’s electric car project "Titan." The auto industry predicts that the electric vehicle powertrain market will grow from 10 trillion won this year to 50 trillion won for the next five years.

will@donga.com · dong@donga.com