LG Electronics bets high on electrical parts for future cars

Models pose at the booth installed by LG Electronics at the 2018 North American International Auto Show (NAIAS). / Courtesy of LG Electronics

By Jun Ji-hye

LG Electronics has been strengthening its business portfolio in automotive electrical parts and systems by making bold investments, to gain a technological edge and find a breakthrough for the money-losing division, company officials said Sunday.

The tech giant's investments into the Vehicle Component Solutions (VS) division this year is expected to reach about 900 billion won ($771 million), according to the firm's quarterly report.

The company has already invested 442.8 billion won in the first three quarters into the division, and plans to invest an additional 455.7 billion won by the end of the year.

LG's VS division is in charge of developing and manufacturing in-vehicle infotainment systems, electric vehicle motors and parts for self-driving cars, among others.

This year's investments into the division increased by 27 percent from last year's 709 billion won.

The amount is considered notable as it is similar to the 908.5 billion won invested into the company's major business, the Home Appliance and Air Solution (H&A) division.

The investments are expected to focus on research and development.

"The area of automotive electrical parts and systems has great growth potential, and is one of the businesses that will lead the future of LG Electronics," an LG Electronics official said. "We will continue to make consistent investments into the VS division in a bid to secure competitive power."

In its third-quarter earnings report issued Oct. 30, the company stated its VS division suffered an operating loss of 60.1 billion won. Securities companies here estimated the division's operating loss for 2019 at about 200 billion won.

At the time, a company official said during a conference call that the firm was working to improve earnings of the division by adjusting its business portfolio as "automobile companies are changing their strategies for the medium and long term."

In a bid to enhance the capabilities of the VS division, LG Electronics signed a business agreement with Microsoft early this year to jointly develop software for autonomous cars powered by artificial intelligence.

The Korean company demonstrated a new system that integrates its webOS Auto in-vehicle infotainment system with Microsoft Connected Vehicle Platform (MCVP) at the Internationale Automobil-Ausstellung (IAA), also known as the International Motor Show Germany, which took place in Frankfurt in September.

Leveraging the combined strengths of webOS Auto and MCVP, the in-vehicle infotainment system that can collect and transmit a wide variety of information such as driver status, door status and app use, according to LG Electronics.

In August last year, the company acquired ZKW, an Austrian automobile lighting supplier, to expand its customer base as global automakers such as BMW and Porsche are ZKW's customers.

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