Samsung SDI "Considering Entry into US Market"

Samsung SDI President Jeon Young-hyun is attending the opening ceremony of the battery specialized exhibition 'InterBattery' and the eco-friendly electric vehicle expo 'xEv Trend Korea 2021' held at COEX in Gangnam-gu, Seoul on the morning of the 9th.

[Asia Economy Reporter Choi Dae-yeol] Jeon Young-hyun, President of Samsung SDI, said on the 9th, "We are considering entering the U.S. market." The company currently imports battery cells from Korea and other countries and assembles them into battery packs at its U.S. factory to supply automakers. The intention to enter the local market is interpreted as building new battery cell production facilities within the U.S. So far, LG Energy Solution and SK Innovation, which are competitors, have announced investment plans in the U.S., but this is the first time Samsung SDI has officially declared its U.S. entry.

President Jeon made these remarks during an interview with the press at the InterBattery 2021 exhibition held at COEX on the same day. Regarding rumors in the industry about the establishment of a joint venture (JV), he said, "It is difficult to comment as it relates to customers," but added, "We are considering it, but nothing has been decided yet." The automotive and battery industries as well as the securities sector expect Samsung SDI to establish a JV with BMW, which has been a long-term battery supply partner. This is because the interests of both the battery manufacturer, which needs a reliable supply source, and the automaker, which requires a stable supply system, align.

Samsung SDI's consideration of direct entry into the U.S. is due to the Biden administration, which has declared the expansion of electric vehicle adoption and is encouraging local production plants. The U.S. is considered one of the world's three largest automobile markets along with Europe and China, but electric vehicles account for less than half of the market. However, with the federal government increasing infrastructure and expanding subsidies, the industry expects the greatest growth potential in the future.

Since producing battery cells?the most basic unit?locally and supplying them to electric vehicle manufacturers is necessary to avoid tariffs, establishing a local factory has been seen as a matter of time. Samsung SDI is ranked among the global top five battery makers following CATL, LG Energy Solution, Panasonic, and BYD. According to an analysis by SNE Research based on global electric vehicle sales from January to April this year, Samsung SDI's battery usage was 3.5 GWh, accounting for about 5.4% market share. It is also regarded as the leading domestic company in next-generation solid-state batteries. Recently, it signed a contract to supply battery cells to the U.S. electric vehicle startup Rivian.

The existing U.S. battery pack factory is located in Auburn Hills, Michigan, but the possibility of the new factory under consideration being nearby seems low. A large site is required for a battery cell factory, and there is no suitable land near the current factory. However, considering accessibility to the existing factory, it may be located in a nearby area. Like LG, Samsung SDI also operates an energy storage system (ESS) business, so the site selection may take this into account. If Samsung SDI establishes a battery cell factory in the U.S., it will have production bases in all major electric vehicle markets, including Tianjin and Xi'an (China) and G?d, Hungary (Europe).