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| A traction motor for electric vehicles / Courtesy of LG Electronics |
By Nam Hyun-woo
Tech giants are expediting their penetration into the auto-making sector, expanding their presence in the fields of autonomous driving and electrification.
The move is a serious challenge to the stronghold of traditional carmakers, and in line with tech firms' efforts to revamp their business models to capitalize on the rapid growth of the "mobility services" market and the convergence of industries
Industry officials and analysts say the competition for advanced mobility services is no longer confined to one between carmakers, they have to take on greater challenges from contenders that do not have their base on the conventional idea of building a car.
This comes amid a number of big new stories about the automobile industry last week.
On Dec. 23, LG Electronics said it will set up an electric vehicle (EV) component joint venture with Canadian auto parts giant Magna at a cost of $1 trillion. Tentatively named LG Magna e-Powertrain, LG Electronics will have a 51 percent stake with Magna owning the rest.
After LG Magna e-Powertrain begins operations in July next year, it will focus on traction motors, inverters and other key powertrain components for EVs made by global carmakers. Analysts said, however, the partnership will not be confined to parts for powertrains.
"In the mid- to long-term, the partnership is anticipated to expand to other LG Group units such as LG Chem for EV batteries, LG Innotek for cameras and sensing modules and LG Hausys for interior materials," Meritz Securities analyst Ju Min-woo said.
Industry officials agree that with the joint venture LG Group has paved its way into entering the automobile business.
"Following the joint venture, the group seems to have secured all capabilities to build an EV platform," an industry official said. "Magna is capable of supplying all the parts for a vehicle except for wind shields and tires, and LG can supply headlamps and other electric parts. When you place the cabin on this, you'll have a complete EV."
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| An image of a possible EV made by Apple / Captured from Autoevolution.com |
Due to this, rumors are flying that the joint venture is aimed at supplying an EV platform for Apple's purported car project.
On Dec. 22, Reuters reported that Apple was aiming to produce self-driving cars by 2024 in a project called Titan. It reported that "it remains unclear who would assemble an Apple-branded car, but sources have said they expect the company to rely on a manufacturing partner to build the vehicles."
"Tesla now builds all of its vehicle hardware by itself, but chances are slim for Apple to realize all of that in the next three years, meaning there are opportunities for parts suppliers to join Apple's car project," eBest Investment & Securities analyst Yoo Ji-woong said.
With Apple sparking the tech giants' invasion into the automobile industry, reports are coming that Tesla is open to acquiring other automakers and Mercedes-Benz maker Daimler could be the best fit, showing that trends in the automobile industry are is now being led by newcomers.
"Carmakers' share prices are in a stark contrast, with newcomers such as Tesla, NIO and Xpeng Motors showing a sharp increase while conventional big name firms based in Germany or Japan are stumbling," Hi Investment & Securities analyst Koh Tae-bong said. "Internal combustion engine (ICE) vehicles are now considered stranded assets, which discount a company's value regardless of its current earnings."
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