Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
LG chief bets big on EV battery business
LG Group Chairman Koo Kwang-mo, right, shakes hands with Hyundai Motor Group Executive Vice Chairman Chung Euisun at LG Chem's Ochang plant in North Chungcheong Province, Monday. / Courtesy of LG Corp.
By Baek Byung-yeul
Chairman Koo meets Hyundai EVC Chung at LG Chem's local battery plant for first time ever
By Baek Byung-yeul
LG Group Chairman Koo Kwang-mo has gone all-out to expand the group's presence in the battery cell business, meeting with Hyundai Motor Group's Executive Vice Chairman Chung Euisun, a move interpreted by many as aiming to diversify his company's battery sales channels.
The two leaders met for the first time ever at LG Chem's battery-manufacturing plant in Ochang, 120 kilometers south of Seoul, Monday morning, and toured the plant's electric vehicle (EV) battery production line. “Koo and Chung shared views relevant to the growth of the EV battery business and how their expanded partnership will be beneficial to both firms,” LG said in a statement.
The high-profile meeting came on the second anniversary of Koo becoming head of the conglomerate. Since he took the top seat, the young group leader has been searching for new business models beyond LG's conventional growth engines of consumer electronics, displays and chemicals. More precisely, Koo has been trying to break down barriers between group affiliates to achieve synergy in an era of web-based connectivity and convergence.
“The management of Hyundai Motor Group also shared views specifically about the long-life batteries LG Chem has been developing and future battery technologies such as lithium-sulfur batteries and solid-state batteries,” the LG statement added.
Neither company gave more specifics on how the two will ally. “Chung's visit to the LG plant was intended to share the development direction of future battery technology and check on LG's high-performance batteries which will be used in future EV models,” Hyundai Motor said.
LG Chem, which is gradually replacing LG's conventionally strong LG Electronics as the group's flagship affiliate, had the largest market share in the global EV battery business with 25.5 percent during the January-April period according to market tracker SNE Research.
The meeting with the Hyundai Motor chief is widely regarded as the young chairman's message to investors that LG will make it a priority to expand the battery business in line with government efforts to reduce greenhouse gas emissions. Even though the car industry has hit a snag due to the coronavirus pandemic, global sales in the EV market achieved 12 percent growth in April year-on-year.
Hyundai Motor is already a client of LG with the country's top automotive group procuring battery products for use in its Kona EV and Ioniq Electric. The two also signed a deal recently under which the LG affiliate will supply battery cells for Hyundai's upcoming EV models that are expected to come out on its EV-only platform ― Electric-Global Modular Platform (E-GMP).
Expanding cooperation with battery suppliers has become a crucial element for carmakers that want to take the lead in the growing EV business. Last year, German carmaker Volkswagen established a joint venture with Swedish battery maker Northvolt to build a lithium-ion battery-producing factory. LG Chem also set up two 50-50 joint ventures with General Motors of the United States and Geely of China in 2019.
The LG-Hyundai meeting also came a few weeks after Chung visited a local Samsung battery factory at which leader Lee Jae-yong gave him a brief tour of one of its manufacturing lines. Chung is also reportedly scheduled to meet with SK Group Chairman Chey Tae-won soon, also to discuss expanded cooperation regarding EV batteries.
However, it remains to be seen whether the battery alliance could be a gain or loss for LG, as more providers will increase Hyundai's price negotiating power. By cooperating in the EV battery sector, Hyundai Motor, the world's fifth-largest carmaker by sales, can measure the capability of each battery maker and use it as leverage to lower the unit cost of battery cells.