 |
| This illustration shows LG and Magna JV with logos of each company, Wednesday. Courtesy of LG Electronics |
LG Electronics said Wednesday that it had agreed with Magna International to launch a joint venture to produce electric vehicle (EV) components in a bid to strengthen its foothold in the auto parts industry.
In a statement, LG said the tentatively named LG Magna e-Powertrain, will be launched in July next year, and it will own 51 percent of the $1 billion-invested company. Headquartered in Incheon, west of Seoul, the company will manufacture e-motors, inverters and onboard chargers. The deal is subject to approval from LG shareholders.
Magna International, the world’s third-largest vehicle parts supplier, has been engaged in discussions with Apple for a possible partnership in developing of Apple’s EV projects.
The agreement can be seen is part of LG’s business strategy shift from being a manufacturer of digital and consumer devices toward becoming a serious EV parts suppliers, as the global technology industry has begun to focus on EV and EV-related products.
LG Energy Solution is an EV battery supplier to most global car makers including Tesla and Ford. Also, the LG affiliate sells batteries for handsets to LG Display and LG Innotek, which provide OLED displays and circuit components to Apple.
LG Group’s decades-long partnership with major tech firms is raising the possibility that the newly-launched joint venture will supply parts to vehicles that Apple could make in the future. However, LG officials contacted by The Korea Times wouldn’t comment on the matter saying they could not talk on client-related issues.
Investors hailed the agreement as LG Group’s “four key parts affiliates” saw a steep rise in their share prices. LG Electronics reached its daily limit-up of 30 percent to close at 119,500 won on the KOSPI. LG Display rose 6.41 percent to end at 18,250 won, while LG Innotek adding 12.8 percent to finish at 185,000 won. LG Chem closed at 806,000 won, up 1.13 percent, according to the Korea Exchange (KRX).
The iPhone designer’s moves to enter the automotive market began “unofficially” back in 2014, but the project was put on hold because of technology challenges and doubts over marketability, according to sources familiar with the matter.
“Apple is looking for the best area to lead in new technology trends beyond smartphones. Simply put, it is seeking the next level. Given the moves by a lot of manufacturing partners, which Apple procures needed components from, it’s fair to say the company has a keen interest in advancing into the autonomous passenger vehicle market,” a senior executive familiar with Apple issues said.
The LG-Magna deal came a few days after Apple said it would move forward with driverless vehicle technology with the aim of producing a passenger car based on its patented battery technology by 2024.