Skip to content
  • KOSPI 3097.92 -35.72 -1.14%
  • KOSDAQ 1012.51 -22.31 -2.16%
  • KOSPI200 406.20 -4.77 -1.16%
  • USD/KRW 1175.9 0.60 0.05%
  • JPY100/KRW 1,059.37 -1.42 -0.13%
  • EUR/KRW 1,375.16 -2.29 -0.17%
  • CNH/KRW 182.07 0.18 0.10%
View Market Snapshot

Future mobility

LG Electronics, Magna to launch $1 bn EV gear JV

Dec 23, 2020 (Gmt+09:00)

LG Electronics, Magna to launch /> bn EV gear JV

LG Electronics Inc. and Magna International Inc. will form a $1 billion joint venture to build electric car components as the tech companies tap into the growing global demand for electric vehicles.

LG, a unit of South Korea’s fourth-largest conglomerate, said in a regulatory filing on Dec. 23 that it will spin off its EV components business into a new JV with the Canadian automotive supplier.

Magna, the world’s No. 3 auto parts maker, will buy a 49% stake in the new company, tentatively named LG Magna e-Powertrain Co., for 501.6 billion won ($453 million), while the remaining 51% will be owned by LG Electronics.

LG said the JV will manufacture e-motors, inverters and onboard chargers – key components for electric cars.

The new company will officially launch in July 2021 after approval at LG’s general shareholder meeting in March. The JV will include more than 1,000 employees at LG locations in the US, Korea and China.

Shares of LG Electronics soared on the news, closing up by the daily limit of 30% at a 10-year high of 119,500 won on Wednesday. The benchmark Kospi index finished up 1%.

Graphics by Jerry Lee
Graphics by Jerry Lee


In its efforts to venture into the auto industry, LG Electronics launched a vehicle component solutions business in 2013 and acquired Austria-based premium lighting systems maker ZKW in 2018.

But the business has reported losses since 2016. In the third quarter of this year, when LG’s other divisions delivered surprising earnings growth, the EV components unit posted a 66.2 billion won operating loss on revenue of 1.66 trillion won.

“LG’s auto components business has grown to have an order backlog worth 60 trillion won, but as a relative newcomer to the industry it has a limited negotiating power,” said an auto industry official. “Its deal with Magna will help it overcome some shortcomings.”

LG Group Chairman Koo Kwang-mo said at a March 2019 shareholder meeting that the group will grow the EV-related business as one of its key growth drivers alongside electronics, chemicals and telecommunications.

Analysts said LG’s latest deal to launch a JV with Magna will elevate its presence in the global EV components market.

LG Group’s affiliates include LG Display Co, which counts Apple Inc. as its customer, as well as LG Chem Ltd, whose wholly owned subsidiary, LG Energy Solution, provides EV batteries to Tesla Inc. Jointly with its affiliates, LG Electronics is already supplying motors, battery packs and other components to GM’s Bolt EV and Jaguar I-PACE, the British firm’s first all-electric car.

According to market researcher IHS Markit, the global eco-friendly vehicle market is forecast to grow from 13.3 million units in 2020 to 56.6 million cars in 2025.

Visitors inside LG Electronics' car concept during the Korea Electronics Show 2020.
Visitors inside LG Electronics' car concept during the Korea Electronics Show 2020.

“Manufacturers need to be disruptive to maintain leadership positions in electrification and, through this deal, LG is entering a new phase in its automotive components business, a growth opportunity with enormous potential,” said Kim Jin-yong, president of LG Electronics' vehicle component solutions unit.

Magna's incoming Chief Executive Swamy Kotagiri said, “This partnership fully aligns with our strategy of being at the forefront of electrification and supporting automakers with a diverse and world-class portfolio.”

Magna already makes EV gear for several global companies, including GM, Volkswagen and BMW.

According to a recent Reuters report, Apple Inc. is considering entering the car business with self-driving car technology and had previously held talks with Magna about manufacturing a car, but no agreement was reached.

By Hyung-Suk Song and Su-Bin Lee

In-Soo Nam edited this article.

Comment 0