Samsung opening battery plants in China in a bid to catch the Chinese electric vehicle market

Samsung SDI, an affiliate of the Samsung group, has announced plans to invest in a major battery joint venture in China, as the tech giant races South Korean compatriots LG Chem and SK innovation for a share of China’s growing electric vehicle market.

According to a report in the Korea Times, the joint venture will invest up to $600 million over the next five years in the battery plant located in the city of Xian, in China’s west.

The plant will be used to manufacture batteries for electric vehicles aimed at the booming Chinese auto market, with leading auto makers including Ford, General Motors, Chrysler and BMW listed as potential customers.

The project, expected to commence in April, will also include Anqing Ring New Group and the government of Shaanxi province as joint venture partners.

“Because Beijing wants to develop the country’s western parts, the new battery plant will get more supports from the regional government. In return, Samsung will hire more,” a Samsung official said.

According to Electronics Times News, the news sees Samsung join SK Innovation and LG Chem in making investments in the country, with the Chinese eco-friendly car market expected to grow by an annual average of 90% per annum over the coming years, reaching 5 million units by 2020.

LG Chem was the first mover, however, SK Innovation managed to secure a joint venture with Beijing Automotive Industry Holdings Co (BAIC), a deal it poached from under the nose of LG Chem.

However, some industry sources are reportedly uneasy about the investments, fearing the South Korean firms could lose their competitive advantage.

“If China secures battery cell technology, it is matter of time for it to overtake Korea with price competitiveness backed up by the abundance of materials, such as cathode and anode materials,” a battery industry insider told Electronics Times News.

“Battery cell technology leak will backfire on [South] Korea’s battery makers to lose their competitive power within a few years.”