hankyoreh

The MIH open platform for electric vehicles by Taiwan’s Foxconn. (from Foxconn's official website)

After Japanese electronics company Sony announced last month that it was making the leap into the electric vehicle market, many people in Korea started to wonder: why don’t Samsung or LG make EVs? It’s a reasonable question.

First of all, their overseas competitors have been venturing into the EV field. In addition to Sony, smartphone makers like Apple and China’s Xiaomi and Huawei are also pursuing EV manufacturing — viewing EVs as essentially “smartphones on wheels.”

The barriers to the automobile industry are no longer as daunting either. Not only have the components become simpler without the need for an internal combustion engine and transmission, but EV production can also be entrusted to an outside specialized company. That obviates the need for major facility investments.

A case in point is Foxconn, a Taiwanese company that Apple commissions to produce iPhones, and its announcement of plans to venture into the EV field to produce vehicles for its client companies.

The new EV concept car that Sony presented last month was produced by Magna, a Canadian auto parts company that ranks third in the world in its field. Magna also joined LG Electronics last year on a joint EV powertrain venture.

LG, in particular, possesses a wealth of EV technology already, proclaiming itself to be a “company that really knows cars.” LG Electronics and group affiliates produce electric motors, batteries, vehicle communication modules, displays, and other components to supply to makers of finished automobiles.

In the case of the Chevy Volt, an EV by the US’ top-ranked automobile company General Motors, LG components account for more than half of the production cost — leading some to refer to it as “essentially an LG vehicle.”

Samsung Electronics has also been nurturing automobile components as a future source of earnings. It acquired US automotive electronics company Harman in 2017 for around 9 trillion won and has been producing its own semiconductors for use in vehicles.

Samsung announced its first foray into the automotive market in 1993. The following year, Samsung Heavy Industries came out with the SEV-III, a purely electric vehicle planned, designed, and produced with the company’s own technology.

Equipped with 28 lead-acid batteries, it could travel 180 kilometers when fully charged with a maximum speed of 130 kilometers per hour.

But both companies said in telephone interviews with the Hankyoreh that they had “no plans” to make finished automobiles. This reflects the underlying view that it is much more profitable for them to supply parts to the makers of finished automobiles rather than to produce vehicles themselves. In other words, they see little to gain from taking part directly in an EV market where competition is already heating up by the day.

Another possible concern is that if Samsung or LG were to produce their own EVs, finished automobile makers might perceive them as competitors and stop buying their components. It’s a similar strategy to the Taiwanese company TSMC, which has risen to become the world’s top-ranked semiconductor foundry company with the motto, “Do not compete with customers.”

“As we’ve seen with things like the British appliance maker Dyson reversing its decision to venture into the EV field, it’s no easy thing to actually mass-produce, sell, and follow up on vehicles with a certain level of quality while abiding by safety regulations,” explained an official at one major finished automobile company.

By Park Jong-o, staff reporter

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