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LG Electronics to produce EV components from new factory in Detroit

LG Electronics to produce EV components from new factory in Detroit

Posted August. 24, 2017 08:50,   

Updated August. 24, 2017 08:55

한국어
LG Electronics plans to invest 25 million U.S. dollars on building a new factory in the U.S. to manufacture electric vehicle components, while major electronic companies have been pushing for EV component business as its new growth driver. LG aims to secure a dominant lead against its rivals by making inroads into the EV market in North America.

LG announced on Wednesday that it would construct an EV component plant in the Detroit suburb of Hazel Park in the U.S. LG's new plant will focus on production of battery pack in the first phase and diversify its portfolio later to supply motor and other major EV components. The factory will be constructed on a 215,000-square-meter lot by the first quarter of 2018.

The facility will be LG’s first EV component factory in the U.S. LG is currently making battery, motor and other EV components in a factory in Incheon, Korea. LG chose a factory site in Michigan, where major automotive companies, including GM, Chrysler and Ford, are located in. With its determination to strengthen its partnership with the automotive companies based in the U.S., LG will add about 300 jobs with construction of the new factory.

“LG is a supplier of 11 core components, including drive motor, inverter and battery pack, to GM’s Chevrolet Bolt EV," said LG Elections. "We can supply more components to automotive companies in North America more effectively from the new factory."

LG also plans to set up a new corporation and integrate LG’s VC North American center located nearby the factory immediately after the construction is completed in order to make a robust entry into the U.S. EV market. LG’s VC North American center is located in Troy, Detroit, which is only 10 kilometers away from Hazel Park where the new factory will be built.

“Our new U.S. headquarters, integrating a new production plant in Hazel Park and the VC North American center in Troy, will be responsible for the entire process from production of EV components to marketing, thereby helping execute the EV business more effectively in North America,” said an official at LG Elections.

LG has been eyeing on the North American market amid rapid growth of the U.S. EV market. Along with the Chinese and European markets, the U.S. market is one of the three biggest EV markets in the world. According to market research firm IHS, 257,929 EVs were sold in China last year, followed by Europe with 108,639 units and the U.S with 104,178 units. The U.S. EV market is forecast to record an average annual growth of 65.5 percent from 2017 through 2020.

Revenue of LG’s vehicle component division in the second quarter of this year increased by 37.9 percent year-on-year from 565 million dollars to 780 million dollars. Since launching the VC division in July 2013, LG has increased its investment by 88 million to 177 million dollars every year, from 177 million dollars in 2015 to 477 million dollars this year.

“As EV, which can drive more than 300 kilometers when fully charged, is expected to be mass-produced from next year, the EV component sector is poised for robust growth in 2018 and 2019” said Kim Pil-soo, a professor of engineering at Daelim University. "It could a good opportunity for LG to turn around its earnings in the VC division."



Jae-Hee Kim jetti@donga.com