[Asia Economy Reporter Hyungsoo Park] Ecocap is showing strong performance. The news that it signed a large-scale supply contract with LS Group's electric vehicle parts affiliate LS e-Mobility Solutions appears to have influenced its stock price.
As of 12:06 PM on the 8th, Ecocap is trading at 8,210 KRW, up 14.19% from the previous day.
Ecocap announced that it signed a parts supply contract with LS Electric's electric vehicle parts subsidiary LS e-Mobility Solutions to respond to the Ford project.
Ecocap plans to deliver parts from its Mexico factory to LS e-Mobility Solutions' Mexico factory starting at the end of 2024. The total order size is expected to be approximately 187.5 billion KRW.
On December 8, 2021, Ecocap signed a memorandum of understanding with LS e-Mobility Solutions regarding cooperation in the electric vehicle parts business. On June 27 of this year, it conducted a third-party allotment capital increase investment worth 5 billion KRW from LS e-Mobility Solutions. It explained that this program order was received as an extension of the business.
Mexico is emerging as a new "land of opportunity" for the domestic electric vehicle industry. Its strengths include being geographically close to the rapidly growing U.S. electric vehicle industry while having low labor costs.
Last month, LS e-Mobility Solutions announced that it established a production base in Mexico and will actively target the North American electric vehicle market. An investment business agreement on this matter was signed in Durango, Mexico, with local government officials in attendance.
Core electric vehicle parts such as ‘relay’ and ‘BDU’ will be produced starting in 2024. A relay is a product that supplies or cuts off electric energy produced by the battery to the motor. The BDU is a module combining relay, current sensor, and fuse. It can be understood as a switch that connects or disconnects the high-voltage current of the battery. The electric vehicle (EV) relay market size is expected to grow from 1.9 trillion KRW this year to 7.3 trillion KRW by 2030.
LS e-Mobility Solutions plans to focus its business on securing orders for high value-added products such as BDUs in the North American market. The BDU is a module product combining relay, current sensor, and fuse, and its price is about 10 times higher than that of a single relay. It is expected that sales will increase starting with the operation of the Mexico factory, which will expand the sales scale.
LS estimates that the electric vehicle market will explosively grow starting in 2025, and sales in Europe alone will grow to 300 billion KRW by 2030. The blueprint of LS e-Mobility Solutions is to increase sales to 700 billion KRW in the newly entered U.S. market and achieve sales of 1 trillion KRW by 2030. Although LS e-Mobility Solutions’ current sales are around 60 billion KRW, it plans to pioneer new markets and grow sales to 1 trillion KRW by 2030.
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