‘LG Battery’ 25 Years of Independence … The Determination of Gu Bonmu Ttuksim and Gu Gwangmo



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On the 29th, LG CEO Kwang-mo Koo visited the LG Chem Research Institute in Daejeon to examine the development of future materials and parts.
On the 29th, LG CEO Kwang-mo Koo visited the LG Chem Research Institute in Daejeon to check on the development of future materials and parts.

LG’s battery business, which started in the 1990s, has been on the road to independence after 25 years. It is analyzed that LG Group Chairman Koo Kwang-mo made a special spin-off decision for the future growth of LG Chem’s battery business, which has invested trillion won from the late LG Group’s former chairman Koo Bon-moo .

The phrase ‘If Samsung has semiconductors, LG has batteries’ has been talked about for a long time in the industry. As such, it is no exaggeration to say that the battery business is a treasure for LG Group and a core business to jump to the top of the world.

However, the electric vehicle battery business is similar to the device industry and requires a huge amount of trillion won investment funds each year. LG Chem is currently the number one player in the global EV battery market share, but as competition is expected to intensify in the future, like a game of chickens, professional management and ongoing investment financing are essential. to fight against major competitors like China and Japan and stop the persecution of newcomers. . This is why the EV battery business in the future may turn into a ‘money battle’ according to responses from automakers. The spin-off of LG Chem’s battery business division is also interpreted on this background. It is the judgment of the group management that now is the best time for the spin-off for future survival and advancement.

LG Chem held a board meeting on the 17th and announced that it decided to spin off the battery business. It will be officially launched as a new corporation ‘LG Energy Solutions (provisional name)’ on December 1 after the approval of the extraordinary general meeting of shareholders on the 30th of next month. LG Chem will have a 100% interest in a recently established unlisted corporation through the physical division method.

LG Group is reported to have been discussing the LG Chem battery business division internally. With the rapid growth of the battery industry and LG Chem’s electric vehicle battery profit structure, Chairman Kwang-mo Koo and the executives decided to separate.

■ The late president Koo Bon-moo sowed the seeds of the battery business in 1995

The late Chairman Koo Bon-moo has sown seeds in LG’s battery business since he took over as LG Group’s third chairman in 1995. Even as companies struggle amid the economic downturn, they have actively invested in R&D. LG Chem is also considered a central subsidiary of the group created through such preventive investment.

LG’s advisor Koo Bon-jun (former LG vice president), his younger brother, also complements the late chairman Koo, and is still considered a leader in the business, such as electrical components, which continued to suffer losses. In 2016, advisor Koo took on new business as a registered director of LG Chem in the position of Director of New Growth Business Promotion of LG Chem.

Chairman Kwang-mo Koo, who took over the leadership of management as the group’s CEO in June 2018, has been striving to improve R&D management and the B2B business since taking office. Last year, he visited the LG Chem Research Institute in person to discuss strategies, such as batteries for third-generation electric vehicles. This was in the sense that LG Chem had to leap forward with rechargeable battery technology and lead the market.

Additionally, Chairman Koo continued to urge LG affiliates to uncover growth engines despite unexpected crises like Corona 19 and the global trade war that begins this year. Even in the second quarter of Corona 19’s success, LG Chem’s battery division posted the highest quarterly sales and operating profit (155.5 billion won).

In October 2002, President Koo Bon-moo is testing a prototype made for the development of electric vehicle batteries. (Photo = LG)

LG Chem began developing lithium ion batteries in 1995 and established the first mass production system in Korea in 1998. In 1999, the following year, the Cheongju plant completed the production of 1 million cells per month. In 2000, the company began developing medium and large-size secondary batteries for electric vehicles and established a research corporation in the United States.

Since then, it has achieved the world’s first titles such as the launch of cylindrical lithium-ion laptop batteries in 2001, the first mass production of LEV batteries at the Cheongju plant in 2004, and the mass production of NCM batteries ( nickel, cobalt, manganese) in 2007.

It was selected as the battery supplier for Hyundai HEV (Avante) in 2007 and GM Volt in 2009, and began to establish a position in the electronic equipment market. Today it encompasses major global customers, including Hyundai and Kia, GM in the United States, Ford, Chrysler, Volkswagen, Renault, Volvo, Audi, Daimler, Mercedes-Benz, Jaguar and Porsche in the United States.

The production base has also been steadily strengthened. LG Chem held the groundbreaking ceremony of an electric vehicle battery plant in Poland at the end of 2016 and started operations in the first quarter of 2018. It has established the industry’s largest four-point global production system, which is connected with Oh Chang (Korea) -Holland (USA) -Nanjing (China) -Wroclaw (歐). In December 2019, it signed a contract to establish an electric vehicle battery joint venture with General Motors of the United States.

Employees at LG Chem’s Ochang plant are inspecting electric vehicle batteries. Photo = LG Chem

■ Market growth potential is high, but large investments should continue … Background to spin-off of raising new funds through IPO

LG Energy Solutions (tentative name), which was recently launched, is expected to focus on securing new funding through this division and increasing production capacity in line with the rapidly growing EV market.

By the end of this year, the total battery production capacity of each of the four production systems will be expanded to more than 100GWh. This is the amount that can produce 1.65 million high-performance pure electric vehicles that can drive 380 km on a single charge. By 2023, it is expected to expand to more than 200 GWh and can produce 3.3 million high-performance pure electric vehicles.

It also continues to develop new technologies. In the second half of next year, it plans to mass-produce NCMA batteries with a nickel content of 90% and a cobalt content of less than 5%. It is a technology that maximizes nickel to increase energy density and minimizes expensive cobalt to lower cost.

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LG Chem plans to turn the new corporation into the best energy solutions company in the world, focusing on batteries, with sales of more than 30 trillion won in 2024. Expected sales of the new subsidiary this year are around 13 trillion won.

An LG official said: “Through this division, we have secured the foundations to attract investment funds on a large scale” and “It is expected that we can further increase management efficiency by concentrating our capabilities on specialized businesses and making decisions. independent and fast that adapt to the characteristics of the business “. It is expected, “he said.





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