Samsung SDI Expands EV Battery Business by Setting up Manufacturing Base in China

On Aug. 18, Samsung SDI broke ground for its battery cell factory in Xian aiming for its operation in October next year. (image: Samsung SDI)

SEOUL, Aug. 20 (Korea Bizwire) – Samsung is spurring to the expansion of its business sector of batteries for electronic vehicles as a new cash cow for the group, amid the ailing group chairperson Lee Kun-hee and the falling sales of its smartphones. Vice Chairperson Lee Jae-yong of Samsung is known to pay particular attention in the sector in an effort to produce eminent achievements for the succession of the group.

On Aug. 18, Samsung SDI broke ground for its battery cell factory in Xian aiming for its operation in October next year. It plans to manufacture EV batteries for 400,000 cars annually.

To make strategic and mutually productive inroads into the Chinese market, Samsung SDI formed a joint venture with Anqing Ring New Group, the largest car engine piston and cylinder maker in China, and a real estate investment firm, Xi’an Gaoke Group, in which Samsung plans to pour US$600 million by 2020 and achieve US$1,000 million of sales.

An official at Samsung said, “We already secured enough orders for the full operation of the plant from 2016.”

Industry observers see the Samsung’s expansion on EV battery business is related to “the post regime of Lee Kun-hee,” who has been hospitalized for a heart attack since this May. As Chairperson Lee’s return to the management is up in the air and its core business of smartphone has slowed, a sense of crisis is engulfing Samsung.

Challenging this situation, Vice Chairperson Lee Jae-yong gravitates towards the EV batter business, one of the five new future cash cows. In fact, Vice Chairperson Lee played an important role for Samsung in accomplishing the contract with BMW supplying several trillion won worth EV batteries to the automaker by using his personal connection with Norbert Reithofer BMW CEO.

Besides, he led negotiations for Samsung’s business directly meeting the CEOs of global automakers.

Samsung is expanding its business opportunities in EV battery, medical equipment, photovoltaic and biosimilar markets as its future cash-cows. Among them, EV battery business can achieve outcomes earlier than the other sectors.

By John Choi (johnchoi@koreabizwire.com)