As part of the rapid growth of its relatively new vehicle components unit, LG Electronics has begun gearing up for the mass production of core parts for GM’s Chevy Bolt electric car — which is expected to begin by the end of the month — according to reports.
In preparation for the beginning of mass production, LG has established a number of new production lines at its Incheon research center, in order to meet demand for 11 core components of GM’s upcoming electric vehicle (EV). These components include: inverters, motors, infotainment system components, and more.
As some background here, LG opened the “Incheon Campus,” located west of Seoul, back in 2013 in order to support the vehicle component (VC) business that it launched at the same time. Since its inception, the company’s VC business has been invested into substantially and in growing quantities. The company apparently sees the division as its next “cash cow.”
The Korea Times continues, noting that despite “some major contracts with global automakers including GM, the division is yet to post a meaningful surplus. The VC division had a 16.8 billion won ($15.23 million) operating loss in the second quarter. But the company remains optimistic about its new growth engine, after sales in the first half of the year skyrocketed 47.9% compared with a year ago to 1.23 trillion.”
Continuing: “LG Electronics plans to invest up to 400 billion won in the VC unit this year. Given its growth in recent years, expectations are that the auto parts division will drive the firm’s overall sales in the second half of the year. Last month, the company said in a regulatory filing that LG and GM signed a partnership deal in October 2015 for LG to mass-produce parts for the Bolt for 6 years, starting this month.”
Commenting on the relatively long period of time that the division has taken to become profitable, an LG Electronics was quoted as saying: “Automakers are very strict in terms of safety and form a long-term relationship with only a few qualified parts suppliers due to safety concerns. That’s why it takes more time for us to generate tangible results in the business. We are still in the investment phase.”
As some further background, LG Electronics currently maintains 3 primary VC manufacturing facilities: the one in Incheon; one in Nanjing, China; and one in Haiphong, Vietnam.