LG Electronics announces joint venture for EV parts

An image for a joint venture between Magna and LG Electronics. [LG ELECTRONICS]

LG Electronics will establish a $1 billion joint venture with Canadian automotive supplier Magna International, the company said on Wednesday, a major bet on the automotive parts business for electric vehicles (EVs).

Shares of LG Electronics hit the daily limit after the announcement, also reaching an all-time high of 119,500 won ($108) during trading Wednesday.

LG said that the new company, tentatively named LG Magna e-Powertrain, will produce key parts for EVs including motors, inverters and onboard chargers, with an official launch set for next July.

The Canadian company will hold a 49 percent stake in the joint venture and LG 51 percent, according to LG Electronics.

“This partnership fully aligns with our strategy of being at the forefront of electrification and supporting automakers with a diverse and world-class portfolio,” said Magna President and CEO Swamy Kotagiri.

“By combining our strengths, we expect to gain investment efficiency and speed to market with synergies to achieve more," Kotagiri said, "all the while continuing to capitalize on the acceleration of the electrified powertrain market.”

The chief of the automotive business at LG echoed those expectations of growth in the EV industry.

“Manufacturers need to be disruptive to maintain leadership positions in electrification and, through this deal, LG is entering a new phase in its automotive components business, a growth opportunity with enormous potential,” said Kim Jin-yong, president of the LG Electronics Vehicle Component Solutions Company.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]