LG Electronics Joins Hands with Magna to Accelerate Entry into European Electric Vehicle Market

[Asia Economy Reporter Changhwan Lee] LG Electronics is teaming up with Magna International (hereinafter Magna), the world's third-largest automotive parts supplier, to actively target the European electric vehicle market.

According to industry sources on the 27th, LG Electronics held an extraordinary board meeting on the 23rd and decided to establish a joint venture in the electric vehicle powertrain sector with Magna.

LG Electronics and Magna agreed to establish a joint venture called 'LG Magna e-Powertrain Co., Ltd.' (tentative name) to quickly build a mass production system that can benefit from economies of scale amid the rapidly advancing electrification trend in the global automotive market, 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 are located in Ontario, Canada.

At the extraordinary board meeting, LG Electronics approved a physical division of part of the Green Business within the VS Division and the establishment of the joint venture. LG Electronics, as the dividing company, will hold 100% of the shares of the newly established company through the division, while Magna will acquire 49% of the shares of the new company. The acquisition amount is $453 million (approximately 501.6 billion KRW).

LG Electronics cited expanding its client base as the main reason for the joint venture with Magna. Currently, LG Electronics' powertrain exports are mainly focused on North America, but leveraging Magna will enable them to target larger electric vehicle markets such as Europe and China beyond North America.

According to Ebest Investment & Securities, Magna is a key player with secured major clients including GM, Ford, and BMW. Especially in electrified powertrains, Magna already has global clients including in China, so it is expected that LG Electronics' powertrain business, currently concentrated on GM, will accelerate.

At a recent IR forum held for investors, LG Electronics emphasized that it plans to actively target the European electric vehicle market, which has been difficult to penetrate until now, through Magna.

An LG Electronics official explained, "The electric vehicle market, expected to grow explosively, requires early market dominance due to its characteristics. Entering the European market, where LG Electronics alone lacks sufficient references, is not easy, so through cooperation with Magna, we will be able to target the European market, which is larger than North America."

Business Synergy with Apple Electric Vehicle Also Expected

There are also market expectations that the electric vehicle motors and inverters produced by LG Magna e-Powertrain will be supplied to the electric vehicles made by Apple.

This is because Magna was a key partner in Apple's 'Titan Project,' launched in 2014 as Apple prepared to enter the electric vehicle business. Local U.S. media reported on the 21st that Apple plans to produce autonomous vehicles equipped with self-designed electric vehicle batteries by 2024.

Researcher Chulhee Cho of Korea Investment & Securities emphasized, "According to foreign media reports, Magna is currently mentioned as Apple's electric vehicle business partner," adding, "Indirect business synergies are also expected through the new company with the existing automotive electronics division (infotainment and other electric vehicle parts)."

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