Samsung SDI may build battery plant in Illinois

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Samsung SDI Co., one of South Korea's top three electric vehicle battery makers, is considering building its first US battery plant in central Illinois, according to a news report last Friday, when Samsung Group leader Jay Y. Lee was released on parole.

His parole raised expectations that the country's largest conglomerate will push ahead with new investments and M&As, including building a battery plant in the US, driving Samsung SDI shares to a 52-week high of 828,000 won ($708) at one point on Friday.

US Senator Dick Durbin told reporters last Thursday that Samsung was in discussions to build a battery plant in Normal, Illinois, Reuters reported, citing a video of the press conference posted on the Pantagraph newspaper website.

Durbin was quoted as saying that a Samsung delegation from Korea visited him last week. He added that if Samsung picked Illinois as the site of its new facility, it will be located next door to electric vehicle startup Rivian, which runs a factory in Normal. The startup said in April this year that Samsung SDI would supply battery cells for its vehicles. 

Samsung SDI declined to confirm the report, saying: "No financial decision has been made yet on the site of our US plant."

Samsung SDI said in June this year that it was considering launching a battery production joint venture in the US with a global automaker to ride on the Biden administration push for green and renewable energy projects.

Mikael Son, senior managing director of Samsung SDI, said during a second-quarter conference call on July 27 that the company would build a new battery plant in the US to take advantage of tax benefits in relation to the US-Canada-Mexico Trade Agreement (USMCA) set to take effect in 2025.

He said that EV battery demand in the US will pick up at a faster pace than expected, driven by the Biden Administration's eco-friendly policies.

"We can't give you further details (about a US plant), but we won't be late in pushing ahead with it," Son added at the time. 

If realized, South Korea’s battery trio, including LG Energy Solution Ltd. and SK Innovation Co., would all have production facilities in the US.

During the call, the company confirmed it would begin supplying its high-performance, Gen5 battery cells to German carmaker BMW starting from the third quarter. The new battery cells maximize their capacity with nickel content at as high as 88%. It gives an electric car mileage of 600 km on a single battery charge.

Samsung SDI's other customers include Stellantis N.V., a Dutch multinational automaker. Stellantis is is the world’s fourth-largest automaking group, with global names such as Fiat Chrysler, Peugeot and Maserati under its wing.

The South Korean battery maker is considering investing at least 3 trillion won ($2.6 billion) to manufacture batteries for Stellantis and a minimum of 1 trillion won for batteries to Rivian, according to the report.

DECISION IN NATIONAL INTEREST

Last month, Samsung SDI and two other major battery makers in South Korea pledged to invest a combined 40.6 trillion won in the EV battery industry over the next decade as part of a government-led initiative to position the country as the global leader.

Attending the ceremony where the massive investment plans were announced, President Moon Jae-in said that batteries were the backbone of the South Korean industries that hold the future of the country.

He urged the companies to sharpen their competitiveness to overtake foreign rivals and further widen the gap with their followers.

In the face of some criticism of Samsung Group Lee's parole, President Moon said via his spokesman that his release, about one year before expiration, was a decision made in the national interest and asked for public understanding. 

Samsung SDI's operating profit surged by 184% year on year to 295.2 billion won in the second quarter on its largest-ever quarterly sales of 3.3 trillion won.

Its shares closed flat at 817,000 won last Friday, after soaring to 828,000 won in intraday trade fueled by aggressive buying from foreign investors. 

Write to Byung-uk Do at dodo@hankyung.com
Yeonhee Kim edited this article.