LG Electronics to Construct Factories for Automotive Parts in the U.S.

LG Electronics is going to construct factories for automotive parts in Michigan, U.S. Not only construction of factories will contribute to production of GM’s Bolt, which receives its major parts from LG Electronics, but it will also expand markets towards U.S. electric vehicle manufacturers such as Ford and Fiat Chrysler Automobiles (FCA). Industries are paying attention towards construction of these factories to see whether or not it will overcome protectionism of the U.S., which has become an issue recently, and expand opportunities for LG Electronics in U.S. electric vehicle markets.

LG Electronics announced on the 23rd that it will be investing $25 million into Hazel Park, Michigan in order to construct factories for parts of electric vehicles. Area of these factories is going to be 215,000 m2 and they will be constructed by first quarter of 2018.

LG Electronics has decided to construct production facilities by leasing land and buildings in Hazel Park after considering possible synergy with LG Electronics VC North America Business Center, which is located in Troy, Michigan, and variety of incentives such as support from state government for fund and employment.

LG Electronics is planning to produce battery packs for electric vehicles first from its new factories and slowly produce other major parts such as motors in the future.

LG Electronics is also going to build its partnership with major automotive manufacturers, which are concentrated in Michigan, by producing parts for electric vehicles. ‘Chevrolet Bolt EV’, which receives 11 major parts such as drive motor, inverter, and battery pack, is also mass-produced from factories that are located in Orion Township, Michigan. LG Electronics is expecting to increase productivity of electric vehicles by making supply of parts more efficient.

LG Electronics is also looking to build partnership with other automotive manufacturers such as Ford and FCA that have manufacturing factories in Michigan.

Vice-Chairman Ku Bon-jun of LG Electronics met with management team of Ford at ‘CES 2016’, which was held in Las Vegas in January of 2016, and discussed about future partnership. Currently LG Chem is supplying batteries to Ford for its electric vehicles. FCA has been using LG Chem’s batteries since last year for its minivan called ‘Pacifica PHEV (Plug-in Hybrid Electric Vehicle). It is likely that LG Electronics will be able to make other partnerships as well besides supply of battery packs when it constructs factories in Michigan.

Hyundai Mobis currently has its factories in Michigan. It is likely that LG Electronics will be able to make additional partnership as it is supplying electric equipment and batteries for electric vehicles to Hyundai Motor Company and Kia Motors.

LG Electronics will also be able to expand its influence in U.S. electric vehicle markets that are growing rapidly. According to a market research company called IHS, U.S. has solidified itself as the top three electric vehicle market in the world along with China (257,929) and Europe (100,869) as it sold 104,178 electric vehicles in 2016. It is expected that annual average growth rate of U.S. electric markets will be 65.5% for next 3 years.

Construction of these factories has created a way to solve problems regarding recent surge of protectionism within the U.S. Construction of these factories can be seen as LG Electronics’ active response towards love calls made by administrative department of President Donald Trump of the U.S. to foreign businesses under a justification for creating jobs within the U.S. LG Electronics and state of Michigan are expecting that these factories will create 300 new jobs.

“We expect that LG Electronics, which is a leading business in next-generation automotive parts for electric vehicles and self-driving cars, will create future for automotive industries along with Michigan.” said Governor Rick Snyder of Michigan.

“Construction of these factories will be an opportunity for LG Electronics to place itself as the best partner for U.S. automotive manufacturers that are preparing for generations of electric vehicles.” said Department Head (President) Lee Woo-jong of LG Electronics VC Business Headquarters.

Staff Reporter Kwon, Dongjoon | [email protected] & Staff Reporter Ryu, Jongeun | [email protected]