The European Commission (EC) has finally given its nod to the establishment of a joint venture between LG Electronics and Canadian auto parts maker Magna International.
As a result, the official launch of the joint venture, which is scheduled to take place in July this year, is expected to happen smoothly.
During its annual shareholders meeting earlier this year in March, LG Electronics decided on splitting the electric vehicle powertrain business from its vehicle component solutions (VS) business division.
The capital for establishing the new venture is 30 billion won (approximately USD 26.7 million), and its headquarters will be established in South Korean city Incheon.
The joint venture will produce and sell electric vehicle powertrains capable of producing power of 250 kilowatts (338 horsepower). The market is predicting that annual sales of the joint venture will exceed 200 billion won (approximately USD 178.2 million).
LG Electronics plans to actively target the electric vehicle powertrain market by collaborating with Magna International. It is anticipating creating synergy by combining its expertise in motor and inverter technologies with Magna International’s engineering capability in the powertrain field.
At its first-quarter performance conference call last month, LG Electronics forecasted that the joint venture between the two companies “will show a growth rate greater than the market size by the year 2025,” and that “the size of the electric vehicle parts market will grow by 35 percent on average annually by the year 2025 from its market size of approximately 10 trillion won last year.”
Meanwhile, the securities industry is predicting that LG Electronics’ VS business division will achieve 2 trillion won (about USD 1.8 billion) in quarterly sales for the first time this year and succeed in turning in a surplus.