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LG Electronics is joining forces with Canada’s Magna International, the world’s third-ranked automobile parts company, to establish a joint electric vehicle (EV) powertrain venture. The company aims to jump on the global EV bandwagon and use electric cars as a future growth engine.

On Dec. 23, LG Electronics announced that it was establishing a joint venture with Magna, which is tentatively being called “LG Magna e-Powertrain.” At an ad hoc board meeting that day, the company decided on the joint venture after splitting off a portion of its vehicle component solutions (VS) project, including EV motors, inverters, chargers, and actuator module systems.

Under this split-off arrangement, LG Electronics will form a new company, in which Magna will have a 49% stake. The company’s shares will be worth US$925 million, with LG Electronics owning a 51% stake and Magna acquiring the remaining 49% for US$453 million. Once the split-off and joint venture are approved at a general shareholders’ meeting in March 2021, the joint venture will be launched around July. Its headquarters will be in Incheon, where around 1,000 employees will be relocated.

Based in Ontario, Magna is a mobility technology company that ranked third worldwide for automobile parts sales last year. In addition to powertrains, it produces sashes, interior and external components, and other parts that are supplied to finished vehicle makers. It is recognized for its engineering feats, its integrated system design, and innovative testing of powertrains. LG boasts technological and manufacturing competitiveness in key EV powertrain components such as motors and inverters.

“We can expect the joint venture to secure new contracts from Magna and a variety of other clients,” the company said, explaining its decision to “focus more on EV powertrains and increase its competitiveness.”

In 2013, LG Electronics launched its VS project to utilize its automobile components as a future growth engine. On Dec. 23, its value on the stock market showed a dramatic increase of nearly 30% from the day before.

By Cho Kye-wan, staff reporter

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