LG Electronics Accelerates in Electric Vehicle Business... Launch of LG Magna Joint Venture

LG Magna Joint Venture Officially Launched Today
Board Approves Physical Division... Jung Won-seok Appointed as First CEO
JV Expected to Achieve 500 Billion KRW in Sales This Year, Over 50% Annual Growth
Sales to Reach 2 Trillion KRW by 2025, Becoming Core in Auto Parts Business

[Asia Economy Reporter Suyeon Woo] The joint venture ‘LG Magna e-Powertrain,’ which will serve as a core pillar of LG Electronics’ automotive components business, officially launched on the 1st. Through collaboration with Magna International, the world’s third-largest automotive parts supplier, the strategy is to expand orders from global automakers and secure a leading position in the rapidly growing electric vehicle powertrain market.

On the same day, LG Electronics held a board meeting and resolved to spin off a portion of its Green Business Division within the Vehicle Components Business Division to establish the ‘LG Magna e-Powertrain’ joint venture. The joint venture will be established by LG Electronics spinning off part of its Green Business Division and Magna investing $453 million (approximately 501.6 billion KRW) to acquire a 49% stake in the newly established company.

Once the final share acquisition is completed soon, LG Electronics will hold 51% of the new company’s shares, and Magna will hold 49%. The board of directors will be composed according to the shareholding ratio, with LG Electronics appointing three members and Magna two. The inaugural CEO of the joint venture was appointed as Jeong Won-seok, Executive Director in charge of the Green Business at LG Electronics’ Vehicle Components Business Division.

The headquarters will be located at LG Electronics’ Incheon Campus, and about 1,000 personnel from the Green Business Division, along with some staff from the Mobile Business Division, which will cease operations at the end of this month, are expected to transfer. The establishment of local subsidiaries for aggressive overseas orders has already been completed. The newly established local subsidiaries in the United States and China as of April will handle LG Magna’s overseas production and sales.

With the launch of this joint venture, LG Electronics expects a rapid increase in orders for electric vehicle powertrain parts in advanced markets such as Europe and the United States. In its first-quarter earnings announcement, LG Electronics predicted that the joint venture’s sales growth rate would average over 50% until 2025. By the end of this year, LG Electronics’ Vehicle Components Business Division’s order backlog is expected to be around 60 trillion KRW, with electric vehicle powertrain parts accounting for about 10 trillion KRW.

Industry insiders anticipate that LG Magna will achieve sales of 500 billion KRW this year, 1 trillion KRW in 2023, and reach the 2.5 trillion KRW range by 2025. Magna, which counts global automakers such as GM, Ford, Chrysler, BMW, Volkswagen, and Honda as major clients, combined with LG Electronics’ technological capabilities, is expected to enable explosive growth. Furthermore, Magna has recently been mentioned as the manufacturer of the much-anticipated ‘Apple Car,’ raising expectations for high growth.

With the launch of LG Magna, LG Electronics has completed a triangular formation to expand its automotive components business, including Infotainment (VS Division), Powertrain (LG Magna), and Infotronics (ZKW). There are also forecasts for the Vehicle Components Business Division to return to profitability in the second half of this year. Kyungtak Noh, a researcher at Eugene Investment & Securities, said, "LG Magna will show growth exceeding the global electric vehicle parts market growth rate (35%)," adding, "The Vehicle Components Business Division’s return to profitability in the second half will change the market’s perception of LG Electronics."

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