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A Big Contract for LG Display: Tesla Motors' Model 3

By John Rosevear - Apr 5, 2016 at 12:05PM

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Reuters is reporting that LG Display has won a contract to supply the information displays in Tesla's upcoming compact sedan. It's the latest sign that the Korean giant is aiming to become a big player in electric cars.

LG will supply the information-display systems in Tesla Motors' new Model 3 sedan, according to a Reuters report. Image source: Tesla Motors

Korean electronics giant LG Display (LPL 2.59%) has won a contract to supply "information displays" for Tesla Motors' (TSLA 4.53%) upcoming Model 3 sedan, according to a Reuters report

Why it's important: The LG group of companies has recently been moving aggressively to become a major auto supplier -- specifically, a supplier to makers of electric cars, including the car seen as a key rival to the Model 3. For LG Display, the move into autos is a significant (and good) move: Contracts with automakers offer more stability (and probably better margins) than consumer products.

Journalists who were offered test-rides in Model 3 prototypes at Tesla's unveiling event last week described a big touchscreen set in the middle of a dashboard that lacked a traditional instrument cluster in front of the driver. It appears that touchscreen system will be provided by LG Display. 

It's believed that the Model 3's "gauges" will be projected into the driver's range of vision via a heads-up display. LG may be providing that system as well.

As of Sunday, Tesla had taken 276,000 reservations for the Model 3, suggesting that the Tesla contract will yield a substantial piece of business for LG.

LG is rapidly becoming a key electric-car supplier
Last year, we learned that LG Display is one of several LG companies heavily involved in General Motors' (GM 5.55%) Chevrolet Bolt. Under the banner of the LG Electronics Vehicle Components group, a team of LG companies worked closely with GM engineers to develop key systems in the new electric Chevy

LG companies are supplying a long list of parts for the Bolt, many of which were developed primarily by the Korean giant. Those parts include much of the Bolt's drivetrain, its battery cells and battery pack, and much of its dashboard, including the instrument cluster and the center console "infotainment" system. LG Electronics said last year that it invested more than $250 million in a Korean factory that will build these components for the Bolt.

LG companies are supplying many key systems in the upcoming Chevrolet Bolt EV, including the instrument cluster and center-console "infotainment" unit. Image source: General Motors

LG and GM have worked together for several years. Among other things, LG was the sole supplier of battery cells for the first-generation Chevrolet Volt plug-in hybrid, beating out the then-dominant electric-car battery supplier, Panasonic (PCRFY 2.21%).

LG's big commitment to GM's electric-car project may have been intended to showcase the company's expertise and willingness to work with other manufacturers of electric vehicles. If that helped LG get the attention of longtime Panasonic partner Tesla, it was a smart move. 

What's next for LG: LG's move to specialize in supplying parts for electric cars is a well-timed one, given that many automakers are spending big right now in efforts to bring advanced electric vehicles to market. As this business expands, it should help bring stability, better forward visibility, and possibly better margins to LG Display's bottom line. 

 

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Stocks Mentioned

LG Display Stock Quote
LG Display
LPL
$5.95 (2.59%) $0.15
General Motors Company Stock Quote
General Motors Company
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Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
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Panasonic Corporation
PCRFY
$8.34 (2.21%) $0.18

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