A vehicle component unit under South Korea’s LG Electronics has established its new base in the United Kingdom to expand its automotive business with car manufacturers in the fast growing European market.

The tech giant has opened a research and development center at the University of Warwick Science Park in the city of Coventry, and is registered as a tenant in the academia-industrial cluster, based on information provided by market insiders exclusively to The Korea Herald. 

The center marks LG’s first R&D unit for automotive business overseas.

Drive Midlands, an industry promotion program led by the Department for International Trade’s Automotive Investment Organization, also stated that LG had set up a new base at the University of Warwick Science Park. AIO is an automotive investment organization set up by the UK government to attract new plants.

The science park is one of the first R&D clusters in Europe, currently affiliated with the University of Warwick. Coventry is in West Midlands, the traditional heart of the UK’s auto industry. Among the park’s list of tenants include LG, Bosch and Schneider Electric, according to its website.

An industry source in the UK told The Korea Herald that a Korean company that works closely with British luxury carmaker Jaguar Land Rover had launched a new R&D center, seeking for business opportunities with car manufacturers in the country.

“We are seeing one large Korean company that is increasingly working with Jaguar Land Rover for establishing its base in UK,” he said. “It’s happening already. When we make it public is the question. It will be a major R&D center to work with UK car manufacturers.”

LG Electronics in Seoul confirmed it was operating its VC unit at the science park and explained that it is a local office being set up for “technical assistance to clients.”

It is widely believed in the industry that the South Korean tech giant had finalized a deal with Jaguar Land Rover to supply electric solution systems and lithium-ion batteries for the UK carmaker’s future vehicle development. However, both companies have been denying the reports, citing business confidentiality.

Jaguar’s full electric vehicle I-PACE slated to be unveiled in the second half of 2018 is to be equipped with batteries developed by the British carmaker and Warwick Manufacturing Group, part of Warwick University, with LG Chem speculated to be in charge of manufacturing them.

Ralf Speth, chief executive of Jaguar Land Rover, said last year that the company would not just focus on existing battery technology that centers on lithium ion, but also on alternative sources.

LG’s vehicle component unit is making inroads into the UK amid the local government’s drive to rebuild the country’s automotive supply chain. Car manufacturers in the UK have been importing a large portion of car parts from other European countries, but its departure from the European Union is expected to bring about considerable tariffs, increasing costs.

Along with expanding its homegrown supply chain, the British government has pledged to put battery development and electric cars at the core of its industrial strategy.

The UK is the third-largest European car producer and the world’s largest producer of luxury cars. The country produced 1.8 million vehicles in 2016 and exported 78 percent of UK-built cars, according to data provided by the UK government.

The UK’s drive to bolster its auto industry is considered an opportunity for Korean auto parts makers.

“The UK is the new market for (Korean) auto parts makers, as it has a solid financial market, support for R&D infrastructure, and what is important is that the country is open to new technologies,” said Yoon Dae-sung, vice chairman of Korea Automobile Importers and Distributors’ Association.

“Particularly, battery makers seem to be freer to make inroads into foreign markets, as other mechanical auto parts makers are tied up with Hyundai and Kia, making it difficult for them to make a deliberate decision to go abroad.”

By Cho Chung-un (christory@heraldcorp.com)