LG, Hyundai seek to deepen vehicle system partnership

LG Group units, including LG Electronics Inc. and LG Innotek Co., are in talks with Hyundai Motor Group to expand collaboration on vehicle systems, according to automobile industry sources, in tandem with the industry's transition into software-defined vehicles.

Early this month, top management of LG Electronics’ automotive electronics division visited Hyundai Motor’s Namyang R&D center in Hwaseong, South Korea at the invitation of Hyundai Motor Co. to its closed-door Tech Day event.

This week, executives of LG Innotek, the world’s leading camera module manufacturer, are scheduled to meet with Hyundai Motor’s top management at the Namyang R&D center, according to the sources on Sunday.

They are understood to discuss strengthening their partnership for vehicle systems ranging from infotainment software to cameras and sensors for autonomous driving.

Their meetings come after LG Group executives recently presented the company's latest automotive electronics technology at Mercedes-Benz headquarters in Germany, where the German carmaker's Chairman Ola Kalenius noted LG Group’s contribution to advancing its self-driving technology.

“As far as I know, Hyundai Motor invited LG Group’s vehicle systems producers after hearing about the cooperation model between Mercedes-Benz and LG,” said an electronics industry official.

LG Group also hopes to expand its collaboration with Hyundai Motor Co. and Kia Corp, under the world's third-largest automotive group.

LG Display Co. supplies OLED panels fitting for the 2024 model of the GV80 sports utility vehicle under Hyundai’s premium brand Genesis.

TURN TO PROFIT

LG Electronics launched the in-vehicle electronics business in 2013 on expectations that the paradigm of the automobile industry would shift to electrification and autonomous driving.

Since then, it has bulked up through M&As, including the purchase of ZKW Group, a German automotive lighting and headlight systems company, for more than 1.1 billion euros ($1.2 billion) in 2018, marking LG’s largest-ever acquisition.

In 2021, it set up LG Magna e-Powertain, a joint venture with Magna International, a Canadian automotive parts manufacturer.

The vehicle systems division run by LG Electronics turned a profit in 2022, reversing its loss-making streak. Its sales exceeded 10 trillion won in 2023.

Its order backlogs are projected to surpass 100 trillion won ($72 billion) this year. It claims Mercedes-Benz, Porsche and BMW, as well as General Motors, Hyundai Motor and Kia as customers.

LG Innotek is also developing automotive electronic components, including in-vehicle cameras, LED and power modules for EVs and autonomous driving. 

Carmakers are striving to advance Level-3 autonomous driving systems, regarded as their new battleground. Vehicles with Level 3, 4 or 5 automated driving systems do not require human supervision.

However, due to safety concerns about autonomous driving, carmakers including Apple Car are pushing back the launch of Level-3 autonomous driving cars.

In January of this year, Apple downgraded its self-driving features to Level 2 from Level 4 following a series of accidents.

Aptive Plc, a US autonomous driving technology company, has decided not to inject additional capital into Motional, a 50:50 joint venture with LG, underscoring the industry's challenge in realizing fully autonomous driving.

“Hyundai Motors will try to have both LG and Samsung as allies to develop software-defined vehicles (SDVs),” said an automobile industry official.

Samsung Group is also a major supplier of vehicle systems, including semiconductor chips, in-vehicle displays, image sensors and cameras, to Hyundai Motor Group.

It is known to have recently studied acquiring a portion of Germany-based Continental Automotive’s advanced driver assistance systems (ADAS) business.

Write to Chae-Yeon Kim at why29@hankyung.com

Yeonhee Kim edited this article.