Samsung plans to build 1st battery cell plant in US - Korea Times
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Samsung plans to build 1st battery cell plant in US

Samsung SDI's booth at the International Electric Vehicle Expo, held on Jeju Island in 2016 / Courtesy of Samsung SDI
Samsung SDI's booth at the International Electric Vehicle Expo, held on Jeju Island in 2016 / Courtesy of Samsung SDI

By Kim Bo-eun

Samsung SDI is looking to build its first battery cell plant in the United States, as the market for electric vehicles (EV) there is set to see explosive growth, according to industry sources, Monday.

The battery making unit of the nation's largest conglomerate already operates a plant for assembling battery packs in the U.S. state of Michigan, but is behind its rivals in efforts to secure U.S. market share.

"Considering the growth potential of the U.S. EV market, it makes sense for Samsung SDI to set up a production facility there," a source said.

A tariff incentive is also a factor in this, as under the U.S.-Mexico-Canada Agreement (USMCA), battery manufacturers can enjoy tariff-free benefits if they base 75 percent of their production in the region by July 2025.

The construction of the plant has become more likely given Samsung SDI will supply batteries to the U.S. EV startup Rivian, which is backed by investments from Amazon and Ford. This has raised speculation that the plant could also be constructed in Michigan.

"A review is taking place from the mid- to long-term perspective, but nothing has been decided so far," a senior company official said.

Given the tariff-free factor, Samsung SDI is taking the first of small steps, although the company is not yet ready to officially reveal its investment plans for the U.S.

Samsung appears to be taking a more prudent approach, seeking to resolve safety issues first, following a spate of recent battery fire incidents. Earlier, BMW and Ford recalled their hybrid vehicles with Samsung SDI batteries after fires were reported.

Outside Korea, Samsung SDI has already built production sites in Hungary and China. Carmakers around the world have vowed to develop their own EV batteries in a bid to secure a stable supply, but battery makers still see ample business opportunities because it will take time for auto manufacturers to be able to mass produce batteries.

South Korean battery manufacturers including LG Energy Solution (LGES) and SK Innovation (SKI) are rushing to the U.S. to capitalize on the exponential growth of the EV market there. Demand for EVs is set to grow 12-fold to 3.8 million vehicles in 2025, from 305,000 vehicles in 2020, according to energy market tracker SNE Research.

The U.S. market is expected to show significantly sharper growth than those of China and Europe. The U.S. market currently ranks third with a 20.8 percent market share, behind China with 38.6 percent and Europe with 32.1 percent.

Samsung SDI's rivals LGES and SKI have been aggressively investing into expanding EV battery production facilities in the U.S. to capture opportunities in the market.

LGES has partnered with GM to set up a joint venture to produce EV batteries, and unveiled a plan to build a second plant in Tennessee, in addition to its one in Lordstown, Ohio. LG's battery affiliate is also separately investing 5 trillion won into setting up new production plants in the U.S. by 2025. The company is soon expected to announce the specifics of its U.S. factory investments.

SKI has two plants in the U.S. state of Georgia that are under construction. The first plant is nearing completion and construction of the second has progressed about 20 percent. Given SK Chairman Chey Tae-won is set to accompany President Moon Jae-in on his trip to Washington this week, speculation is growing over the possibility of the company announcing additional investments.

Kim Bo-eun

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