LG And Magna Set up A Joint Company for E-Mobility
South Korea’s technology giant LG Electronics and the Canadian-Austrian automotive supplier Magna are founding a joint venture to build components for electric cars. As LG Electronics announced on Wednesday, the joint venture will be called LG Magna e-Powertrain and will be valued at around one billion US dollars.
According to the Electronic Disclosure System of the Financial Supervisory Service on the 23rd, through a temporary board meeting on the 23rd, LG Electronics will physically divide some electric vehicle parts and battery parts-related businesses such as electric vehicle motors, PE (Power Electronics), and battery heaters. Announced that it will be newly established.
The new company is’LG Magna e-Powertrain Co., Ltd.LG Electronics owns 51% and Magna International owns 49%. First, LG Electronics will acquire 100% of the new company’s stake through the physical split, followed by Magna’s acquisition of 49% of the split new company’s stake for $453 million.
It is expected that a new joint venture will be established on the 9th of the same month after the business split on July 2nd next year. Prior to this, at the regular shareholders’ meeting held on March 24, next year, the plan for the physical division and establishment of a joint venture will be proposed and passed through the agenda.
The new LG Magma will be operated with its headquarters in Incheon. About 1,000 employees who were previously engaged in the business area at LG Electronics are planning to move to a joint venture.
Magna, Canada, which joined hands with LG Electronics this time, is a mobility technology company founded in 1957. In addition to the powertrain, it is evaluated that it is leading the global auto parts market by producing various auto parts such as chassis and interior and exterior materials and supplying them to automakers. Its headquarters are located in Ontario, Canada.
It can be interpreted that LG Electronics chose to focus on the electric vehicle powertrain business through the establishment of this joint venture. It is also read as an attempt to divide the business so that quick decision-making is possible and to increase business competitiveness through a joint venture with Magna, which has abundant business experience and global customer network.
LG Electronics and Magna are expected to increase their speed in targeting the rapidly growing eco-friendly vehicle and electrification parts market through joint ventures in the future. The advantages of each company are expected to be able to not only win orders from new customers by exerting synergy, but also establish a mass production system early and achieve economies of scale.
Swamy Kotagiri, the next CEO of Magna, said, “With LG Electronics, Magna’s strategy to build a world-class portfolio for automakers while leading the powertrain market has emerged with LG Electronics.” We expect to advance in the market for electrified parts.
Jin-Yong Kim, Vice President of LG Electronics’ VS Business Division, said, “We boldly made the best choice to lead the global market in the electrified parts business with unlimited possibilities and growth opportunities.” “We will lead the upcoming electric vehicle era by actively utilizing our rich experience and global customer network, and both companies will enhance the competitiveness of the auto parts business.”
LG And Magna Set up A Joint Company For e-Mobility - /10