LG Elec eyes profit from EV powertrain, car lighting biz

The South Korean tech giant is targeting the turnarounds of LG Magna and ZKW, which logged losses in 2022

The Mercedes-Benz EQS EV sedan equipped with LG Electronics’ in-vehicle infotainment system (Courtesy of LG Electronics)

Sungsu Bae 2

2023-01-31 19:02:18 baebae@hankyung.com

Electric vehicles

LG Electronics Inc., the world’s leading home appliance maker, aims to take profit from the electric vehicle powertrain and car lighting units of its automotive electronics business this year while raising sales of the division, which is poised to lead the company’s future growth, by 19%.

The South Korean tech giant’s automotive electronics division reported its first profit in seven years for 2022 thanks to healthy profits from the in-vehicle infotainment (IVI) unit, but the other two – the EV powertrain and car lighting segments – posted losses.

LG Electronics' vehicle component solutions division set turnarounds of ZKW Group, an Austria-based firm acquired in 2018, and LG Magna e-Powertrain Co., a joint venture with Canadian car parts maker Magna International Inc. as core tasks of the year. ZKW handles the automotive lighting business, while LG Magna manufactures e-motors, inverters and onboard chargers – key components for EVs.

LG Electronics plans to improve supply chain management and production efficiency while cutting output costs across the division.

Last year, the lighting and electric powertrain units suffered operating losses of 47.9 billion won ($38.8 million) and 26.4 billion won, respectively, while the IVI unit enjoyed a profit of 275.7 billion won, helping the automotive electronics division log an operating profit of 169.6 billion won.

MAJOR PROJECTS WITH GLOBAL CARMAKERS

Those sluggish units are expected to turn around as they are working with major automakers, industry sources in Seoul said.

“ZWK and LG Magna are likely to turn to the black this year once they reflect earnings from major projects with global carmakers,” said one of the sources.

The turnarounds of those units are likely to fuel the company’s new growth engine.

LG Electronics aims to raise the automotive electronics division’s revenue to 10.3 trillion won this year from 8.6 trillion won in 2022 through sales of high-value-added and high-performance products, given increasing orders. The division’s order backlog is likely to jump by 25% to 100 trillion won as of end-2023, analysts said.

The global automotive electronics market was forecast to top $700 billion by 2028 from an expected $400 billion in 2024, according to industry analysis firm Research and Markets.

Write to Sungsu Bae at baebae@hankyung.com
Jongwoo Cheon edited this article.