LG Magna e-Powertrain, Final Preparations Accelerate Ahead of Launch Next Month

[Asia Economy Reporter Jeong Hyunjin] LG Electronics and Magna, the world's third-largest Canadian auto parts manufacturer, are accelerating final preparations ahead of the launch of their joint venture, LG Magna e-Powertrain, next month. As the global electrification parts market rapidly expands, LG Magna e-Powertrain is expected to grow quickly and significantly increase its scale immediately after its launch.

According to industry sources on the 11th, LG Magna e-Powertrain plans to officially launch on the 1st of next month and operate its business based in the United States and China. Its main business includes automotive parts in the powertrain sector such as motors, inverters, and vehicle chargers. Earlier, LG Electronics established overseas subsidiaries of LG Magna e-Powertrain in Michigan, USA, and Nanjing, China, respectively, in April. Parts production will be handled in Korea and China, while the US subsidiary will be responsible only for sales.

Along with the establishment of the corporation, organizational structuring is also progressing swiftly. LG Electronics plans to assign personnel from the Green Business Division of the VS Business Unit to LG Magna within this month. Additionally, since last month, LG Electronics' VS Business Unit has been conducting recruitment procedures for research and development (R&D) and production engineers, initially hiring them under the VS Business Unit and then transferring their affiliation to LG Magna as of July 1. The newly established US subsidiary is also undergoing recruitment procedures. Through this, LG Magna plans to start with approximately 1,000 employees as initially announced.

The CEO of LG Magna e-Powertrain will be appointed by LG Electronics. Considering the joint venture’s shareholding structure of 51% LG Electronics and 49% Magna, out of the total five board members, LG Electronics will appoint three members including the CEO, CFO, and one director, while Magna will appoint two members. Currently, it is expected that one of the executives responsible for the VS Business Unit will take on the CEO role.

Most other procedures required for establishing the joint venture have been completed. LG Electronics approved the spin-off of the electric vehicle powertrain-related business within the VS Business Unit at a shareholders' meeting in March. Last month, the European Union (EU) approved the establishment of LG Magna, and merger reviews in about ten countries have also been nearly completed. An LG Electronics official stated, "Most approvals have been obtained, and the remaining regions will complete the procedures within this month."

LG Electronics views the automotive electronics sector as a new growth engine and is focusing on strengthening three pillars: its own VS Business Unit, ZKW, and LG Magna e-Powertrain. Industry experts forecast that LG Magna e-Powertrain will achieve annual sales of 500 billion KRW this year, 1 trillion KRW in 2023, and 2 trillion KRW in 2025. In the Q1 earnings conference call last April, LG Electronics stated, "The joint venture established with Magna is expected to have an annual sales growth rate of over 50% until 2025, showing a growth rate higher than the market average."