LG Group’s backlog of electric vehicle (automotive electronic equipment) and battery business orders is expected to exceed 500 trillion won, the largest in Korea, in the first quarter of next year. Analysts say that this is because the company has increased its number of customers with a diverse product portfolio ranging from power units to cutting-edge cameras and communication modules.
According to the industry on the 28th, LG Group’s electric vehicle and battery order balance was tallied at 477 trillion won as of this day. The backlog of orders for LG Electronics VS Business Headquarters is 84 trillion won, and LG Innotek and LG Display are 13 trillion won and 10 trillion won, respectively. LG Energy Solutions’ battery order balance reaches 370 trillion won. The LG Group produces infotainment systems (LG Electronics), power trains (LG Magna), vehicle displays (LG Display), camera and communication modules (LG Innotek), and electric vehicle batteries (LG Energy Solutions).
It is evaluated that there are also results in securing profitability, which was considered a homework task. LG Electronics VS Business Headquarters recently posted a surplus for two consecutive quarters. LG Innotek is also known to have turned a profit in the electric parts business in the third quarter of this year. Thanks to its well-equipped portfolio and technological prowess, the order balance for electric vehicles and batteries is expected to exceed 500 trillion won in the first quarter of next year. There are also observations that it will be selected as a partner of Apple, which is developing the ‘Apple Car’.
Camera, OLED, infotainment, battery, powertrain, presence
Focus on order expansion… Profitability matters… ‘Tactile’ despite the possibility of collaboration with Apple
Vehicle camera, display, infotainment, battery, power train (powertrain)… . It is a major automotive electric (electronic equipment) item developed and sold by major LG affiliates. In the industry, there is talk that “LG is taking over all electronic parts markets ‘except for the body’.” The dominant analysis is that within a few years, the electric vehicle business will be selected as a core business group representing LG.
○Portfolio completion… full scale expansion
According to the industry on the 28th, LG has decided to strengthen investment in the electric field as a major new business next year at the group level. Since the second half of the year, major affiliates such as LG Electronics and LG Innotek have been generating operating profits in the electronics sector, putting more effort into business expansion.
LG has an ‘all-round portfolio’ to the extent that it is said to be involved in almost all businesses related to electric components. LG Electronics, LG Chem, LG Display, LG Innotek, etc. This is the first time that their order backlog exceeds 100 trillion won.
LG Electronics’ representative electric vehicle business is in the field of infotainment (information + entertainment) equipment such as car navigation systems. LG Electronics won orders for vehicle infotainment systems and high-performance telematics from Mercedes-Benz and BMW this year. LG Electronics’ strategy is to grow the electric vehicle business in three areas by combining electric vehicle powertrain and lighting.
LG Energy Solutions’ electric vehicle batteries and LG Display’s automotive display panels are also increasing their presence among global automakers. LG Innotek, which produces automobile motors, sensors, and camera modules, also succeeded in turning a profit in the electric vehicle business from the third quarter of this year. In particular, LG Display’s automotive OLED (organic light emitting diode) and LG Innotek’s vehicle camera module are ranked first in global market share in each field.
○ Possibility of collaboration with Apple… Profitability is key
Industry analysts say that the growth of LG, a latecomer in the automotive field, has been largely due to M&A and increased R&D investment. In 2018, LG Electronics acquired Austrian ZKW, a vehicle lighting system company, and established a joint venture, ‘LG Magna E Powertrain’ with Magna International in Canada.
The VS Business Headquarters, which is in charge of LG Electronics’ electric vehicle business, is said to have set next year’s sales target by more than two digits higher than this year’s. Inside LG Electronics, this year’s VS division’s sales are projected to be 8.907 trillion won. It is the highest level ever. Next year, sales are expected to be around 10 trillion won.
The key for the future is securing profitability. An LG official said, “If we have focused on winning orders, it is important to make it a ‘representative source of revenue’ in the future.”
In addition to the parts business, LG plans to expand its business to electric vehicle charging and have a full lineup of electric vehicles. LG Electronics newly established an EV (electric vehicle) charging division in an organizational reorganization last month. We plan to develop electric vehicle charging solutions here.
As Apple in the US is known to release the’Apple Car’ around 2026, interest in LG’s electric vehicle business is growing. In the industry, there are also rumors that LG will form a group-level task force (TF) to respond. An industry insider said, “If LG’s electric vehicle portfolio and Apple’s design capabilities are combined, synergy will be great.”
Reporters Jeong Ji-eun/Hwang Jeong-soo [email protected]
