South Korean multinational electronics firm LG Electronics Inc. has reportedly signed a joint venture agreement with Magna International Inc., a Canadian mobility technology company, to develop key components used in electric cars.
Sources with knowledge of the matter stated that the LG Magna e-Powertrain, the temporary name for the joint venture, is valued at approximately USD 1 billion. The two companies will focus on producing onboard chargers, inverters, and e-motors used in an electric car.
The agreement extends a wave of consolidation among suppliers who intend to cater to the growing demand for e-axle systems, electric vehicles, further integrating driving gears, power controls, and electric motors in one unit.
As a matter of fact, BorgWarner Inc., an automotive gear making company, had reportedly acquired its rival Delphi, while Japanese manufacturers such as Toyota Motor Corp., Denso Corp., and Aisin Seiki Corp. have initiated a new e-axle venture called the BluE Nexus.
Although LG Electronics’ vehicle component business registered 19 quarters of consecutive losses, the company reportedly believes to generate profits during the third quarter of 2021. In fact, LG Electronics' shares soared by 24.7%, the highest since the year 2011 following the recent development.
Swamy Kotagiri, an incoming CEO at Magna, mentioned in a comment that the partnership will allow the company to cater to their existing customers as well as key audiences across the globe, preferably new startups searching for electric platforms.
The deal is scheduled to be finalized by July 2021, subject to approval from LG shareholders among other conditions, and will hire around 1,000 staff at LG locations in China, Seoul, and the United States. Sources further claimed that LG will own 51% of the new firm while the remaining 49% will be owned by Magna International.
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