Azernews.Az

By Alimat Aliyeva

Just three years after entering the electric vehicle (EV) charging business, LG Electronics has announced its decision to exit the sector, citing prolonged stagnation in demand — often referred to as the “EV chasm” — and intensifying competition as key factors eroding profitability, Azernews reports.

The company made the announcement on Tuesday, confirming it will shut down its EV charger operations, which were managed under its Eco Solution (ES) Business Division. “This is a strategic rebalancing decision in response to changes in the business environment,” an LG spokesperson said.

LG entered the EV charging market in 2022 by acquiring full ownership of HiEV Charger, an EV charging specialist, through a joint investment with GS Energy and GS Neotek. The company had ambitious plans to become a leading player in the global charging infrastructure market, developing both slow and fast chargers, and aiming to build a “unicorn” business capable of generating over 1 trillion won ($703 million) in annual sales.

Charging stations were installed at Emart retail locations across South Korea, and LG also began expanding into the U.S. market in 2023. However, changing market dynamics — including a global slowdown in EV adoption and increased competition from established players like Tesla, ChargePoint, and Electrify America — led LG to reassess the business’s long-term viability.

HiEV Charger will be liquidated, and all employees involved in the EV charging division will be reassigned to other departments within LG Electronics. The company has committed to continuing maintenance and support services for existing customers to ensure a smooth transition.

Going forward, LG’s Eco Solution division will double down on its heating, ventilation, and air conditioning (HVAC) business, following a “selection and concentration” strategy. The division will focus on residential and commercial air conditioners, chillers, energy-efficient heat pumps, and high-performance cooling systems for data centers — a growing segment driven by AI and cloud infrastructure.

While LG pulls back from one mobility-related business, its Vehicle Component Solutions (VS) division is accelerating. On Tuesday, LG announced that it had received the 2024 Best Value Innovation Award from Toyota North America, marking the first time the Korean tech giant has received this recognition.

Toyota evaluates its suppliers annually based on innovation, quality, cost-efficiency, and supply chain performance. LG began its relationship with Toyota in 2011 by supplying navigation systems, and since 2019 has significantly expanded its portfolio to include advanced telematics solutions — smart communication modules crucial for connected vehicles.

Today, LG’s telematics control units (TCUs) support 5G-based vehicle-to-everything (V2X) communication and offer advanced cybersecurity features — a must-have in the age of smart and autonomous vehicles. North America remains a core market, accounting for 30% of Toyota’s global sales.

LG also received the “Creativity Team Award” at General Motors’ Supplier of the Year ceremony, underscoring its growing influence as a Tier 1 automotive supplier.

“We will continue to strengthen our collaboration with global automakers by leveraging differentiated technologies that align with the evolution of the future mobility industry,” said Eun Seok-hyun, head of LG Electronics’ VS business unit.

While LG’s retreat from the EV charging space reflects the current turbulence in the industry, its growing traction in vehicle electronics and climate control solutions shows the company’s agility in realigning its strategy toward more promising, future-facing technologies.