SEOUL – LG Electronics Inc. said that it will spend about $25 million to build an electric car-parts factory in the Detroit suburb of Hazel Park, Mich., as the company seeks new engines of growth amid losses at its once-lucrative mobile business.
In a statement, LG said Wednesday that its new U.S. plant will produce battery packs for electric cars. It will expand into other key components later.
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The company began supplying parts for General Motors Co.'s Chevrolet Bolt EV last year, produced mostly in its South Korea plant.
For LG, the Michigan plant will be its first vehicle-components factory in the U.S. The Seoul-based company already has production facilities in five countries, including China, Vietnam and Brazil.
The new investment, which the company says will create about 300 jobs, comes amid expectations of rapid growth in the U.S. electric-vehicle market. Research firm IHS Markit projects the industry will experience annual growth of more than 65% over the next three years.
But it isn't clear how much of a boost LG will get from its new U.S. production facility, or if the added capacity will be enough to turn around its sagging vehicle-parts business.
LG's vehicle-components unit has recorded only one quarter of profit since it began reporting earnings in 2015, two years after it was launched. In the first half of this year, the business recorded an operating loss of 30.9 billion South Korean won ($27.3 million) and sales of 1.76 trillion won.
LG and crosstown rival Samsung Electronics Co. have scrambled to open more production facilities in the U.S. following the election of U.S. President Donald Trump, who has called for a reinvigoration of American manufacturing. In June, Samsung said it would invest $380 million to expand its home-appliance operations in Newberry, S.C. In February, LG said it would build a new washing-machine factory in Tennessee, its first major U.S. plant.
An LG spokesman declined to comment on the expected production capacity of the new plant.
Write to Eun-Young Jeong at Eun-Young.Jeong@wsj.com
LG Electronics' vehicle-components unit recorded an operating loss of 30.9 billion South Korean won and sales of 1.76 trillion won in the first half of this year. "LG Electronics to Build Factory for Electric Car Parts in Michigan" at 10:14 p.m. ET, incorrectly attributed the operating loss and sales figures to the company in the seventh paragraph. (Aug. 23)
Corrections & Amplifications
This item was corrected at 9:52 a.m. ET because the original incorrectly said the loss was 30.9 million South Korean won.
LG Electronics' vehicle-components unit recorded an operating loss of 30.9 billion South Korean won and sales of 1.76 trillion won in the first half of this year. "Correction to LG Electronics to Build Factory, " at 11:53 p.m. ET Wednesday, incorrectly said the loss was 30.9 million South Korean won. (Aug. 24, 2017)
(END) Dow Jones Newswires
August 24, 2017 09:38 ET (13:38 GMT)
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