LG Elec expects $9 bn revenue from VS division 2022 with new JV with Magna

LG Electronics Inc. on Thursday launches its ambitious joint-venture in electric vehicle powertrain with Magna International Inc. with anticipation of achieving $9 billion revenue from electronics vehicle division next year after earning first income this year.

LG Magna e-Powertrain, a JV between South Korean tech giant and Canada-based world’s No. 3 auto parts company, goes to work on July 1. With the addition, LG Electronics commands vehicle infotainment, automotive lighting, and powertrain through global units under its automotive solutions division.

The new JV is estimated to deliver 500 billion won ($442.4 million) in revenue this year, with an annual growth of an average 50 percent. Industry experts expect its revenue would reach some-2 trillion won by 2025.

With the addition, the company’s vehicle component solutions (VS) division is projected to rake in 8 trillion won in revenue this year and 10 trillion won next year from modest 5.8 trillion won last year.

LG Electronics launched the VS division in 2013 and declared the vehicle component business as the next growth engine. LG Group Chairman Koo Kwang-mo also has been active in realigning business structure with a focus on the VS since his formal ascending to the helm of the Korean tech giant.

LG Electronics acquired Austria’s automotive lighting systems supplier ZKW for 1.4 trillion won in 2018, and the company since then has reported yearly revenue of above 1 billion euros ($1.19 billion) and is forecast to earn about 1.2 billion euros this year.

In March this year, LG Electronics launched vehicle infotainment joint-venture named Alluto with Swiss software company Luxoft in Silicon Valley.

Global EV output is estimated to grow fast to 42.97 million units by 2025 from 15.60 million units this year, according to estimates by global market research firm IHS Markit.

Experts now expect the VS to become mainstay businesses of LG Electronics with home appliances and display.

LG Electronics shares closed 1.53 percent lower at 161,000 won in Seoul trading on Tuesday.

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