LG Electronics Inc. is now developing some of its car component business plans into a joint venture with Canadian company, Magna International, as reported by Yahoo Finance.
According to an exchange filing, Magna will buy a 49% stake in LG’s new car component unit for 501.6 billion won ($453 million USD). The new company is tentatively called LG Magna e-Powertrain.
The new joint venture has plans to develop motors for electric vehicles (EVs), power inverters, and electric-drive systems. These parts are set for production in Incheon, Korea, and Nanjing, China, according to sources familiar with the matter.
After the news, LG Electronics’ shares grew by about 30% their daily limit, signifying the company’s biggest gain on record. LG Electronics’ largest shareholder, LG Corp., also saw its biggest gains since March, with shares advancing 10%. In addition, Magna’s US-listed shares grew to $72.50, up 9% from the day’s opening.
Jeon Kyung-Dae, chief investment officer for equities at Macquarie Investment Management in Seoul, Korea, believes that LG Electronics could be a new investment option for those originally looking at Tesla.
Kyung-Dae said, “[LG Electronics is] emerging as a new alternative to Tesla stock for investors.” He continued, “[They’re] known as a leader in electronics parts and may produce electric cars based on an original equipment manufacturer model, rather than establishing its own EV brand.”
Whatever LG Magna e-Powertrain brings to consumers, it seems investors are already liking the affiliate companies’ shares. And as they continue to grow, the EV supply chain will benefit too.
