By Lee Min-hyung
LG Group is moving to continue active investment in its auto parts business, regardless of the rise of electric vehicles (EV).
“The bulk of our sales comes from audio, video, navigation and telematics systems, all of which can also be used in to EVs,” an LG Electronics official said. “The EV-related parts business is promising, but we have no plans to put more priority on it.”
This comes after LG Group Vice Chairman Koo Bon-joon said last week it is not expecting any tangible results from its vehicle component (VC) division this year, due to its infancy.
Koo is the de facto head of the LG Electronics’ auto parts division, which has been identified as the group’s next cash cow. He said the VC division has yet to sign a deal with such EV giants as Tesla.
“It’s been only three years since we tapped into the business,” said the official. “The outlook is promising, as we are improving our global profile in the auto parts business by signing more partnerships with global automakers,” he said.
The VC division recorded an operating loss of 15.8 billion won ($13.3 million) during the first quarter of this year. But the remark reflects that LG Group does not take it seriously, stressing the division is still in its infancy.
The VC division has sought to diversify its revenue streams by signing more partnerships with global automakers including Volkswagen, Mercedes Benz and General Motors (GM), since its establishment in July 2013.
In particular, the company signed an alliance with GM last October over supplying core EV components _ including battery packs and motors _ for Chevrolet’s Bolt EV.
LG Electronics said in a regulatory filing last month that the outlook for its VC division is bright, as the recent partnership with GM will pave the way for expanding its partnerships with other EV manufacturers.
LG Electronics’ VC division recorded 9.7 billion won in operating profit in the fourth quarter of last year, generating profit for the first time since it began reporting VC’s divisional revenue in the first quarter of last year.