LG Magna to spend $78 mn on China capacity expansion

LG Magna e-Powertrain Co. will invest $78 million in its Chinese plant of electric vehicle parts to meet growing demand in the world’s largest EV market.

The joint venture between LG Electronics Inc. and Canada’s auto parts maker Magna International Inc. decided capital expenditure of 101.6 billion won ($78 million) to expand the capacity of a factory in Nanjing that manufactures key components such as motors and inverters, according to the South Korean home appliance giant on Wednesday.

“It was necessary to secure production capacity in advance as EV demand has been rapidly increasing,” said an LG Electronics official.

LG Magna in April broke ground for a plant in Mexico with a schedule to complete the construction in 2023 for the North American EV market.

It currently has production facilities in Incheon, South Korea, and Nanjing while operating sales offices in Detroit, Michigan, Sulzbach, Germany, Shanghai and Tokyo to target the world’s major EV markets – China, Europe and the US.

RISING SALES WITH IMPROVING PROFITABILITY

LG Magna, established in July last year, has been steadily increasing sales with a revenue of 250 billion won in the first six months, 8% of LG Electronics vehicle component solutions (VS) division’s sales in the second half of 2021.

“We have secured a lot of new orders recently,” said an LG Magna official. “Sales are expected to keep growing with profitability improving despite a semiconductor shortage and rising commodity prices.”

LG Electronics predicted LG Magna’s sales to rise more than 50% a year on average by 2025 as growth in the global EV demand was likely to accelerate.

The European Union countries earlier this week agreed to require new cars sold in the block to emit zero carbon dioxide from 2035, banning sales of internal combustion engine cars.

The global EV component market is forecast to grow 35% a year on average by 2025 from some 10 trillion won in 2020.

Write to Ji-Eun Jeong at jeong@hankyung.com
Jongwoo Cheon edited this article.