Samsung SDI Faces Growing Concerns Amid Aggressive Investments by LG and SK

Samsung SDI to Decide on US Investment Within the Year
Having a Battery Factory in the US Benefits Taxes and Orders

[Asia Economy Reporter Hwang Yoon-joo] Samsung SDI, which is considering investment in the United States, is facing deepening concerns. Unlike LG Energy Solution and SK Innovation, which have already established battery joint ventures with the top two U.S. automakers, Samsung SDI has yet to make a concrete decision. There are internal worries that if the U.S. investment is not decided within this year, the company may fall behind its competitors.

According to industry sources on the 22nd, Samsung SDI plans to decide on its U.S. investment as early as November, or at the latest within this year. Delays in U.S. investment raise concerns not only about losing ground in the global battery market share competition but also about falling behind in the domestic rankings among LG Energy Solution, Samsung SDI, and SK Innovation.

The battery industry is essentially a competition between Korean and Chinese companies. Except for Panasonic, all of the top 10 companies in market share are either Korean or Chinese. The reason Chinese companies have increased their battery market share is due to preferential subsidies and tax benefits given to electric vehicles equipped with Chinese batteries.

With the inauguration of the Biden administration, opportunities have arisen for domestic battery companies. Due to eco-friendly policies and the 'Buy American' policy, tax benefits for batteries and electric vehicles produced in the U.S. are increasing. This is the background behind LG Energy Solution and SK Innovation establishing battery joint ventures with GM and Ford, respectively. On the other hand, due to U.S.-China tensions, Chinese battery companies find it difficult to invest in the U.S.

Moreover, as automakers have announced strategies to increase the proportion of electric vehicle production starting in 2025, the surge in battery demand is expected to occur sooner than anticipated. Analysts suggest that construction of factories must begin by next year at the latest to ensure uninterrupted battery supply. The concerns toward Samsung SDI’s cautious stance on establishing a U.S. battery plant stem from these circumstances.

The industry is naturally paying attention to the electric vehicle business of Stellantis Group, the third-largest automaker in the U.S. Like GM and Ford, Stellantis Group must establish a battery joint venture to transition to electric vehicles. There are speculations that Samsung SDI is discussing a battery joint venture with Stellantis, but the decision is being delayed. Some also mention the possibility of a joint venture with LG Energy Solution.

A Samsung SDI official stated, "The decision is being made carefully, but once confirmed, Samsung invests quickly and decisively. There is a consensus that it will be difficult if the U.S. investment extends beyond this year, so we will decide on the investment soon."