LG Chem will no doubt play a key role in manufacturing faster electric cars for Renault, one of the world's leaders in the segment, according to recent developments.
But it remains to be seen just how it will work, whether it will be in LG's advantage and how it will help the firm find new drivers of growth, especially as LG Electronics' new Vehicle Components unit appears to be struggling to make a name for itself.
Amid the uncertainty, there is now talk of the new unit being merged with LG Chem's battery division, or the other way around.
"There is a big possibility that the pair will try to join hands in order to boost the auto arm's competence and create bigger synergy," said one industry watcher close to the local auto industry. He added the strategists within LG appeared to be reviewing the plans that have yet to be confirmed.
Even before LG and Renault made their big announcement on the sidelines of President Park Geun-hye's recent European tour, sources had predicted LG would try its hand at electric vehicles.
"LG's new auto unit had taken on some interesting employees, including a senior employee from Tesla Motors of the US, so it seemed obvious what it eventually wanted to do," said another source close to the issue.
Tesla is still losing money despite selling a record number of cars. On top of that, there are reports of cars catching fire and suspicions that the company violated safety regulations.
The deal between LG and Renault is expected to operate on a "supply to order" or "built to specifications" basis, meaning LG will have little say in the manufacturing and will be limited to being a battery supplier.
LG's Vehicle Component Unit may join with battery division
Given such conditions, it's vital for LG to gain reputation as more than a battery supplier.
But LG's Vehicle Components unit, born in July this year, has been losing staff left and right, mostly due to less-than-satisfactory working conditions.