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Electric vehicles

LG Elec completes stock deal with Magna for EV powertrain JV

LG Magna to reinforce LG Elec.’s automotive electronics business

By Jul 28, 2021 (Gmt+09:00)

LG Magna will reinforce LG Electronics' automotive electronics business.
LG Magna will reinforce LG Electronics' automotive electronics business.

LG Electronics Inc. completed a stock sale deal with Canadian auto parts maker Magna International Inc. for an electric vehicle (EV) powertrain joint venture, as the South Korean home appliance giant aims to tap into the fast-growing global EV markets.

LG Electronics said on July 28 that it sold a 49% stake in LG Magna e-Powertrain Co. to the Canadian partner. LG Electronics spun off its EV powertrain business on July 1 and set up a wholly-owned subsidiary. Magna invested $453 million in the subsidiary for the stake and LG Electronics will hold the remaining 51%.

Cheong Won-suk, who has been leading LG Electronics’ EV powertrain business at the vehicle components solutions (VS) unit, will be the joint venture’s Chief Executive Officer (CEO). Javier Perez, who has been overseeing Magna's production and quality management in Asia, will be its Chief Operating Officer (COO).

LG Magna will seek deals to supply its key products including EV powertrain modules and related parts in earnest after appointing these executives next month.

LG Magna will help LG Electronics reinforce its automotive electronics business, which LG Group Chairman Koo Kwang-mo regards as one of the group’s future growth engines. LG Electronics’ VS unit covers infotainment and ZKW Group, an Austria-based firm acquired in 2018, leads the automotive lighting business.

LG Magna will work on previous orders won by LG Electronics until the joint venture secures its own. LG Electronics is known to have 60 trillion won ($52 billion) worth of backlog of automotive electronics orders, of which 10 trillion won is related to components related to EV powertrains.

LG Magna is expected to post some 500 billion won in revenue this year, according to the industry. The sales are expected to rise to 1 trillion won in 2023 and 2 trillion won in 2025 if they grow an average 50% a year as LG Electronics predicted.

Write to Sin-Young Park at nyusos@hankyung.com

Jongwoo Cheon edited this article.

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