LG Electronics will split off part of its business to form a joint venture with Canadian automobile component maker Magna International, the companies said on Wednesday.
LG will split of its green business, part of its vehicle component solution business, to form a new wholly owned company. Magna will that buy 49% of this new company, which will be tentatively called LG Magna e-Powertrain. Magna will pay US$453 million for the shares.
The joint venture will inaugurate in July 2021 after gaining LG shareholders’ approval in March.
The company will be based in Incheon. Around a thousand LG employees will be shifted to the new firm. LG Magna e-Powertrain will also have operations in China and the US.
It will produce e-motors, inverters, chargers and e-drive systems.
“Manufacturers need to be disruptive to maintain leadership positions in electrification and, through this deal, LG is entering a new phase in its automotive components business, a growth opportunity with enormous potential,” said Kim Jin-yong, president of the LG Electronics’ vehicle component solution business. “We believe that the combination of our in-house prowess and the experience and extensive history of Magna will transform the EV powertrain space faster than if we proceed alone.”
LG formed its vehicle component business in 2013. It bought Austrian headlamp company ZKW for 1.1 billion euro back in 2018.