LG and Magna announce billion dollar joint venture in electric car gear

South Korea-based LG Electronics Inc and automotive supplier Magna International Inc are launching a joint venture that will make key components for electric cars, the companies announced on Wednesday.

The joint venture, tentatively called LG Magna e-Powertrain and valued at $1 billion, will manufacture e-motors, inverters and onboard chargers, according to LG Electronics.

The deal expands a wave of consolidation among suppliers aiming to capture a growing market for electric vehicle, e-axle systems, which combine electric motors, power controls and driving gears in one unit. Earlier this year, gear maker BorgWarner Inc acquired rival Delphi, and Japanese manufacturers Aisin Seiki Corp, Denso Corp and Toyota Motor Corp have created a new e-axle venture called BluE Nexus.

Shares of LG Electronics jumped as much as 24.7% as of 0358 GMT to their highest since 2011, compared to the broader market KOSPI’s 1% rise.

LG Electronics is an affiliate of South Korea’s fourth-largest conglomerate, with interests ranging from electronics, including smartphones, to home appliances. LG Group’s major affiliates include LG Display Co Ltd, which counts Apple Inc as its customer, as well as LG Chem Ltd, whose wholly owned LG Energy Solution subsidiary provides EV batteries to Tesla Inc.

TORONTO/SEOUL