South Korea’s electronics-to-battery conglomerate LG Group expects its received orders for auto components to reach over 500 trillion won ($393 billion) by the first quarter of next year as its affiliates foster car components as their key growth drivers.
LG’s orders backlog for auto parts that include infotainment systems, powertrain parts, vehicle displays and batteries stood at 477 trillion won as of Wednesday, industry data showed.
LG Group affiliates involved in the auto parts business include LG Display Co., which counts Apple Inc., Mercedes Benz and Audi among its customers; LG Chem Ltd., whose subsidiary, LG Energy Solution Ltd., provides EV batteries to Tesla Inc.; and LG Innotek Co., which makes camera modules for cars.
Jointly with its affiliates, home appliance maker LG Electronics Inc. is supplying motors, battery packs and other components to General Motors’ Bolt EV and Jaguar I-PACE, the British firm’s first all-electric car.
GM’s Bolt EV is even referred to as an “LG car” as more than half of its components are made by LG Group affiliates.
LG Electronics’ vehicle components solutions (VS) division has 84 trillion won in backlogged orders, while received auto parts orders for LG Innotek and LG Display are worth 13 trillion won and 10 trillion won, respectively, according to LG Group and industry data.
LG Energy Solution, the world’s second-largest EV battery maker, has 370 trillion won in orders that will keep it busy for years.
LG Display's vehicle screens for an infotainment system BEEFED-UP PRESENCE IN AUTO PARTS MARKET
The company launched a vehicle component division in 2013 and later expanded it to cover infotainment technology, including audio, video and navigation systems as well as EV powertrain parts.
In 2018, LG Electronics acquired Austria-based automotive lighting company ZKW Group whose clients include German premium carmakers such as Mercedes Benz, BMW, Audi and Porsche.
And early this year, LG Electronics received orders to build infotainment systems and telematics equipment for Mercedes Benz, BMW and Japan’s Honda Motor.
The company said it expects its VS business sales to reach 8.9 trillion won this year, and to rise further to over 10 trillion won in 2023.
LG Electronics created an EV charging business division last month as part of its efforts to provide a full lineup for its EV parts business.
The interior of the Mercedes-Benz EQS equipped with an infotainment system developed by LG Electronics PROFITABILITY IMPROVES
LG Group’s auto parts business has been losing money for years.
Starting this year, however, some of its affiliates have turned around, with LG Electronics’ VS division posting profits over the past two quarters.
LG Innotek’s loss-making automotive parts business is also said to have turned around from the third quarter.
“We have been investing heavily in our auto parts business for more than a decade. Now we see such efforts bearing fruit,” said an LG Innotek official.
In recent months, shares of LG Electronics and LG Innotek rose significantly on market chatter that they could be selected as partners of Apple, which is developing its own electric car.
The US tech giant is expected to release the Apple Car as early as 2026.
Write to Ji-Eun Jeong and Jeong-Soo Hwang at jeong@hankyung.com In-Soo Nam edited this article.
