World News – CA – LG and Magna Announce Electric Car Equipment Joint Venture

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LG Electronics Inc from South Korea and the automotive supplier Magna International Inc are forming a joint venture that will manufacture key components for electric cars, the companies announced on Wednesday.

The joint venture tentatively named LG Magna e-Powertrain, valued at $ 1 billion, will manufacture electric motors, inverters and on-board chargers, according to LG Electronics.

The deal expands a wave of supplier consolidation aimed at capturing a growing market for electric vehicles and e-axle systems that combine electric motors, power controls and chassis into one unit. Earlier this year, transmission maker BorgWarner Inc took over rival Delphi, and Japanese manufacturers Aisin Seiki Corp, Denso Corp, and Toyota Motor Corp have formed a new e-axle company called BluE Nexus.

LG Electronics’ shares rose as much as 24. 7% from 0358 GMT on its highest level since 2011, compared to KOSPI’s 1% increase in the broader market.

LG Electronics is a subsidiary of South Korea’s fourth largest conglomerate. Interests range from electronics, including smartphones, to home appliances. LG Group’s key subsidiaries include LG Display Co Ltd, whose customers include Apple Inc, and LG Chem Ltd, whose wholly owned subsidiary LG Energy Solution Tesla Inc. EV batteries supplies.

The transaction is expected to close in July 2021, including until approval by LG shareholders. According to a press release, 1. 000 employees at LG locations in the USA, Seoul and China.

Magna already makes electronic vehicle equipment for companies like Volkswagen. But gaining more control over the production of the high-quality parts of an electric car « has always been part of the strategy as we move forward, » said Swamy Kotagiri, Magna’s new CEO, in an interview with Reuters on Tuesday before the announcement.

« In my opinion, the combined synergies of the two companies enable us to address not only our existing customers, but also all important target groups and preferably the new entrances that are looking for electrical platforms, » ​​he said.

When asked about the schedule for the turnaround of the Vehicle Component Solutions business during an earnings call in October, the company announced that LG Electronics would expect a profit in the third quarter of next year.

Revenue from this business was $ 150 million in 2019. However, Kotagiri expects an average annual growth rate of around 50% through 2025.

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Magna International, Electric Vehicle Joint Venture, LG Electronics