[Click eStock] "LG Electronics, the Best EV Partner to Lead the Ecosystem"

From Joint Ventures to Subsidiaries and Affiliates: Total Package for Electric Vehicle Parts
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[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] LG Electronics, equipped with overseas companies such as Magna, with which it has partnered, and ZKW, which it acquired in the past, as well as group affiliates, is emerging as the best collaboration partner for electric vehicle companies, and is expected to lead the formation of the electric vehicle market ecosystem.

On the 19th, KB Securities predicted that LG Electronics will emerge as the best collaboration partner in the global electric vehicle market in the future.

Previously, it was reported that ZKW, an Austrian automotive parts company acquired by LG Electronics in 2018, has completed contracts for all production capacity available over the next three years. It is said that they are currently receiving orders for production starting in 2024. In particular, the CEO of ZKW stated that despite the decline in operating rates of automobile companies due to COVID-19, this year's order backlog, estimated at 12 trillion won, has set a record high, so it is expected to achieve the highest performance ever next year.

Collaboration with Canadian automotive parts company Magna is also expected to proceed smoothly. Magna, the No. 1 automotive parts company in North America and No. 3 worldwide, is also expected to have already secured orders for production capacity available over the next 3 to $_ years. Over the next five years, the joint venture (JV) established by LG and Magna, 'LG Magna e-Powertrain,' is estimated to have an average annual sales growth rate of 44%.

LG Group's own automotive parts performance is also growing. A full-scale performance rebound is expected starting this year. Beginning with LG Chem's turnaround to profitability in large and medium-sized batteries last year, LG Innotek's automotive parts business is expected to return to profitability in the first quarter of this year. This is the first profit turnaround in three years since the first quarter of 2018. LG Electronics' automotive parts (VS) division, which has secured an order backlog of 60 trillion won, is also expected to return to profitability from the third quarter of this year. From next year, all LG Group automotive parts affiliates are expected to generate operating profits on an annual basis, marking the beginning of full-scale profit recovery in the automotive parts business.

Dongwon Kim, a researcher at KB Securities, said, "LG Electronics can strategically collaborate with automotive parts affiliates such as the LG-Magna joint venture, LG Chem, LG Innotek, and LG Display, and has secured an efficient parts supply chain, emerging as the best collaboration partner in the global electric vehicle market and leading market formation." He added, "In particular, big tech companies like Apple, expected to enter the electric vehicle market in 2024, have limited options for choosing electric vehicle collaboration partners considering the short preparation period of 2 to 3 years for market entry and the competitive landscape with Tesla."