LG Electronics and Magna International announced an intention to create a joint venture, tentatively called LG Magna e-Powertrain, to manufacture electric motors, inverters, onboard chargers and for certain automakers' "related e-drive systems."
The idea is to combine Magna’s strength in electric powertrain systems and automotive manufacturing with LG’s expertise in component development for e-motors and inverters.
According to Bloomberg, LG Electronics will spin off some of its EV components business into a new joint venture, in which Magna will buy a 49% stake for 501.6 billion won ($453 million). The remaining 51% will belong to LG Electronics.
The roughly $1 billion deal is expected to close in July of 2021, although it all depends on obtaining LG shareholder approval and all necessary regulatory approvals.
LG Magna e-Powertrain should include more than 1,000 employees located at LG locations in the United States, South Korea and China.
It's difficult to judge what it will all mean for the EV market, but for sure, the joint venture should be considered as a major contender for comprehensive electrification projects. Let's recall that LG is a supplier of core EV components to various EVs, while Magna not only supplies components, but is a contract manufacturer of cars (including BEVs like Jaguar I-PACE and PHEVs).
"The JV enables the two companies to continue to grow their electric powertrain product offerings by leveraging existing technologies, engineering capabilities and global footprints. The market for e-motors, inverters and electric drive systems is expected to have significant growth between now and 2030, and the JV will target this fast-growing global market with a world-class portfolio.
LG has established experience in the development of electric vehicle components most notably for the Chevrolet Bolt EV and Jaguar I-PACE. LG will help accelerate Magna’s time to market and scale of manufacturing for electrification components, while software and systems integration are competencies that Magna brings to this venture. This JV will allow customers to select from a portfolio of reliable components through to integration of an entire electrified powertrain."
Magna President and incoming CEO Swamy Kotagiri said:
“This partnership fully aligns with our strategy of being at the forefront of electrification and supporting automakers with a diverse and world-class portfolio. By combining our strengths, we expect to gain investment efficiency and speed to market with synergies to achieve more, all while continuing to capitalize on the acceleration of the electrified powertrain market.”
Dr. Kim Jin-yong, President of the LG Electronics Vehicle Component Solutions Company said:
“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. We believe that the combination of our in-house prowess and the experience and extensive history of Magna will transform the EV powertrain space faster than if we proceed alone.”