Shareholders of LG Chem agreed on Friday to split off the division responsible for battery packs for electric cars.
Audi, Jaguar, Mercedes-Benz, Volkswagen, Volvo and Porsche, among others, use battery packs from the South Korean manufacturer.
The newly formed subsidiary of LG Chem should be called LG Energy Solutions and start operating from 1 December.
Part of the company may be listed on the stock exchange next year.
With LG Energy Solutions, LG Chem hopes to be able to respond more quickly to changes in the market, especially now that competition is rapidly increasing, said CEO Shin Hak-cheol.
LG Chem is the largest producer of battery cells and battery packs for electric cars in the world after CATL in China and Panasonic in Japan.
Earlier this year, production of the Audi e-tron in Belgium and that of the Jaguar I-Pace in Austria had to be interrupted due to problems with the supply of battery packs from the LG Chem factory in Poland.