The two giants reached a cooperation

With the rapid development of electric vehicles and other new energy vehicles in recent years, electric vehicle-related parts suppliers are also stepping up the integration of market resources. South Korea’s LG Electronics announced yesterday that it will establish a joint venture with Canadian auto parts supplier Magna to produce Core components of electric vehicles.

LG Electronics convened an interim board of directors yesterday and voted to establish a joint venture with Magna, the world’s third-largest auto parts supplier, after the divestiture of part of the company’s auto parts business. The company will produce engines and drive systems in the future. Core parts of automobiles. It is understood that the joint venture will be formally established in July next year, with an equity value of US$925 million (approximately RMB 6.04 billion). At that time, LG Electronics will hold 51% and Magna will hold 49%.

Affected by this, LG Electronics’ stock price soared by 30% yesterday, the highest price increase in history after 12 years. Not only did the share prices of listed companies under the LG Group rise collectively, it also led the entire electronics sector in South Korea to lead the market. Today, the company’s share price jumped by nearly 8% at the opening, and the current intraday share price has corrected.


In fact, LG Electronics established its auto parts department in 2013, and it has suffered losses for four consecutive years due to limited customer resources. The operating loss in the third quarter of this year was approximately RMB 400 million. LG Electronics acquired a high-end automotive lighting supplier in Austria two years ago. The cooperation with Magna this time is another crucial step in the layout of the electric car parts industry. The joint venture is expected to integrate LG Electronics’ technology and manufacturing capabilities, as well as Magna’s global customer resources and production experience, to build a mass production system for electric vehicle parts to improve market competitiveness.

Data shows that the global new energy vehicle market has reached 13.3 million vehicles this year, and it is expected that the growth rate will be more than three times in the next five years to 56.6 million vehicles. However, there are not many companies that can achieve large-scale production in the core parts and components of new energy vehicles, and the traditional automotive industry chain is facing pressure from technology and environmental regulations. This year, many car companies and parts suppliers, including Toyota and Hyundai, have stepped up their deployment in electric vehicle parts business. How to integrate market resources and build a mass production system as soon as possible will be one of the keys for related companies to seize the blue ocean of electric vehicle parts.

Leave a Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

©Spark Global Limited Financial information & The content of the website comes from the Internet, and any infringement links will be deleted.