LG Electronics "Establishes Electric Vehicle Powertrain Joint Venture with Magna" (Comprehensive)

Establishment of LG Magna e-Powertrain (tentative) with Canada's Magna
Following the spin-off of part of the Green Business in the VS Division, joint venture 추진
The joint venture is the best choice to enhance competitiveness and growth potential of the powertrain business

[Asia Economy Reporter Changhwan Lee] LG Electronics announced on the 23rd that it has decided to establish a joint venture in the electric vehicle powertrain sector with Magna International (hereinafter Magna), the world's third-largest automotive parts supplier.

LG Electronics and Magna agreed to establish a joint venture tentatively named ‘LG Magna e-Powertrain Co., Ltd’ to quickly establish a mass production system that can benefit from economies of scale amid the rapidly advancing global trend of vehicle electrification, thereby enhancing business competitiveness and growth potential.

Magna, a mobility technology company, was founded in 1957. It is one of the world's largest automotive parts suppliers and ranked third globally in sales last year. In addition to powertrains, Magna produces various automotive parts such as chassis and interior/exterior components, supplying them to automakers and leading the global automotive parts market. Its headquarters is located in Ontario, Canada.

On the same day, LG Electronics held an extraordinary board meeting and resolved to spin off part of its Green Business within the VS Division and establish a joint venture. LG Electronics, as the spin-off company, will hold 100% of the shares of the newly established company through the spin-off, while Magna will acquire 49% of the shares. The acquisition amount is $453 million (approximately 501.6 billion KRW).

Once the spin-off and joint venture establishment are approved at the shareholders' meeting scheduled for March next year, the joint venture is expected to officially launch around July.

The headquarters will be located in Incheon, South Korea, and about 1,000 employees related to part of the Green Business will transfer to the joint venture.

The portion of the Green Business to be spun off includes motors, inverters, vehicle chargers used in electric vehicles, as well as drive systems (modular products consisting of motors, inverters, and reducers).

LG Electronics Drive Motor

The Best Choice to Enhance Business Competitiveness and Growth Potential

LG Electronics explained that it decided on the spin-off to focus more on the electric vehicle powertrain business and enhance business competitiveness. It also judged that having the joint venture make independent and swift decisions is the best way to maximize growth potential.

Magna possesses engineering capabilities in integrated system design and verification in the powertrain field, including rich business experience and a global customer network. LG Electronics has technological and manufacturing competitiveness in core components of electric vehicle powertrains such as motors and inverters.

LG Electronics and Magna expect that their strengths will create the best synergy and contribute to the advancement of the joint venture’s business amid the rapidly growing eco-friendly vehicle and electrification parts market.

The joint venture will be able to expect new orders not only from Magna but also from Magna’s customers, enabling early establishment of a mass production system and realization of economies of scale.

Previously, LG Electronics was recognized for its technological capabilities by supplying key parts installed in electric vehicles such as the Chevrolet Bolt EV and Jaguar I-PACE.

Swamy Kotagiri, Magna’s next CEO, said, “While leading the powertrain market, Magna’s strategy to build a world-class portfolio for automakers will be realized together with LG Electronics. We expect to lead the rapidly emerging electrification parts market by leveraging the strengths of both companies.”

Jinyong Kim, head of LG Electronics’ VS Business Division, emphasized, “We made a bold and best choice to lead the global market in the electrification parts business, which has infinite potential and growth opportunities. The joint venture will actively utilize LG Electronics’ outstanding manufacturing technology and Magna’s rich experience and global customer network to lead the upcoming electric vehicle era and enhance the competitiveness of both companies’ automotive parts businesses.”

Completing Three Pillars of Automotive Parts Business: VS Business Division, ZKW, LG Magna Joint Venture

LG Electronics established the VS (Vehicle Components Solutions) Business Division (formerly VC Business Division) in 2013 to nurture the automotive parts business as a future growth engine and cash cow. In August 2018, it acquired ZKW, an Austrian premium automotive headlamp company.

ZKW possesses the technology to be the world’s first to mass-produce premium headlamps equipped with next-generation light sources such as high-intensity LED daytime running lamps and laser headlamps. It supplies premium headlamps to premium automakers including BMW, Mercedes-Benz, Audi, and Porsche. It ranks within the top five globally in the premium headlamp market by production volume.

At the end of 2019, LG Electronics integrated the vehicle lamp business within the VS Business Division into ZKW. Starting with the launch of the joint venture, LG Electronics will promote its automotive parts business through three pillars: VS Business Division (focused on infotainment), ZKW (lamps), and LG Magna e-Powertrain (powertrain). The performance of all three will be consolidated into the VS Business Division’s consolidated sales and operating profit.

This content was produced with the assistance of AI translation services.