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South Korean electronics company LG Electronics Ltd has entered into a joint venture agreement with Canadian technology company Magna International Inc (NYSE:MGA), the two companies announced Monday.
What Happened: The joint venture will manufacture automobile components like e-motors, inverters, onboard chargers, etc, and focus exclusively on the EV segment. According to Reuters, the joint venture, under the tentative name LG Magna e-Powertrain, could reach a valuation of approximately $1 billion. LG will control a 51% majority, and Magna will own the remaining 49% of the JV.
Reportedly, the collaboration will house over 1000 employees across LG’s locations in the U.S., South Korea, and China. Although the deal is yet to be approved by LG’s shareholders, the company expects to close the agreement sometime in July next year.
Why Does It Matter: Both companies expect to benefit from mutual synergies while relying on the growing demand for electric vehicles. LG’s expertise lies in manufacturing electrical components, whereas Magna possesses software and systems integration competencies.
“By combining our strengths, we expect to gain investment efficiency and speed to market with synergies to achieve more, all while continuing to capitalize on the acceleration of the electrified powertrain market,” Magna President and CEO Swamy Kotagir said in a statement.
LG Electronics' parent company LG Corp is expanding its presence in the electric vehicles segment. One of its subsidiaries, LG Chem Ltd is a supplier for Tesla Inc (NASDAQ:TSLA).
Earlier this month, it was reported that LG Chem planned to double its battery cell manufacturing to support Tesla's EV demand. With the growing hype around electric and autonomous vehicles, even the iPhone maker Apple Inc (NASDAQ:AAPL) is reported to be planning a launch of a self-driving EV sometime in 2024.
Price Action: MGA stock closed 4.11% higher at $66.36 on Tuesday.
Click here to check out Benzinga's EV Hub for the latest electric vehicles news
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