By Kim Yoo-chul
LSIS is in talks with Daimler AG’s Mercedes-Benz to supply electronic vehicle (EV) parts for upcoming Mercedes EVs, said LSIS officials and senior fund managers at leading investment banks in Seoul, Wednesday.
“LSIS is negotiating with Mercedes-Benz to provide EV relays to be used in upcoming premium models from the German car manufacturer,” a source from LSIS told The Korea Times by telephone.
LSIS is an affiliate of LS Group.
The source said that LSIS is seeking for new business opportunities with German car manufacturers including Mercedes by the end of this year and start supplying its parts to Mercedes from 2017 at the earliest
He added that the two parties are now trying to iron out differences over the quality of LSIS products because Daimler has very strict standards.
“Because this is a very important deal for us, LSIS is trying hard to persuade the management of Daimler to accept our products. We are in the middle of working-level discussions. LSIS plans to address issues raised by the carmaker as early as possible,” said another official.
If the deal closes, then the two companies will collaborate for the development of EV products that are customized for Mercedes EVs, the official said.
“Because LSIS has connections with top management of LG Group, LSIS is trying to get some help from LG Chem, the world’s top battery supplier for EVs, by using LG Chem-owned customer channels,” said the official.
He added that once a deal is reached, LSIS will seek to broaden its business partnership with Daimler as a long-term strategy.
LSIS spokesman declined to comment, while Mercedes-Benz Korea has yet to respond to an inquiry.
The LSIS move is in line with the firm’s attempt to diversify its business portfolio toward EVs amid the industry’s new trend for connected vehicles.
LSIS is currently supplying relays for EVs in Europe. General Motors is one of LSIS’s key clients, said managers at a leading investment bank in Seoul.
“It’s expected LSIS will yield some visible returns in its EV parts business soon. LSIS is forecast to win some 360 billion won in deals to supply its EV components this year,” Kium Securities analyst Kim Ji-san said.
The new trend for connected vehicles has pushed leading car manufacturers, including Mercedes and BMW, to approach Korean firms to purchase parts to be used in EVs.
Daimler AG is one of the leading car manufacturers that is heavily increasing its investment in EVs. Industry experts said that the German player should diversify its parts-sourcing channels to hedge against the risks associated with a single supplier.