The traditional rivalry between the two Korean conglomerates, Samsung and LG, has been rekindled on one of their crucial next growth engines ― batteries for electric cars.
Electric component maker Samsung SDI, headed by Park Sang-jin, said Monday it has set up a new business division exclusively in charge of the development and sales of electric car batteries. The company’s No. 2 man ― executive vice president Park Je-seung ― was named the division chief.
The new establishment comes as part of the Samsung affiliate’s recent takeover of shares owned by German-based Bosch of SB LiMotive, a joint venture of the two companies that makes lithium-ion batteries for vehicles.
“Integrating the team into the company was considered to be more efficient for future businesses,” said a Samsung SDI spokesperson, adding that fundamentally, there was nothing different about the company or its car battery unit.
In 2010, Samsung pinpointed the electric car battery sector, together with the medical, biologics, solar energy and OLED display panel businesses as areas to push for future growth engines by 2020.
Despite its global supremacy in the rechargeable battery market for smartphones and other mobile devices, Samsung is a late-comer in their automotive adoption compared to LG, whose batteries have been widely adopted by global carmakers.
The group’s heir apparent and Samsung Electronics’ chief operating officer Lee Jay-yong has already manifested keen interest in the field when he held last year a series of meetings with leaders of auto companies such as BMW, Renault-Nissan Alliance and Volkswagen.
This year Germany’s BMW plans to start producing its new environment-friendly BMW i brand cars that will be equipped with the batteries made by Samsung.
“Considering the market has just opened up, it’s meaningless who is leading the market right now. We feel confident in securing more orders in the future,” said the Samsung official on the company’s competition with LG.
LG Chem, in the meantime, says it would further step up efforts to maintain its competitive edge taking advantage of superior production capacity.
According to industry watchers, it takes some six months to complete production facilities for batteries for IT devices, while those for electric car batteries should be built two to three years before production.
“As we have almost fulfilled our production capacity, we will focus more on research and development of next-generation batteries,” said an LG Chem spokesperson.
On Sunday, LG Group announced a 3.5 trillion won investment plan for chemicals business globally, although how much of the money would go into the battery division was unspecified.
“Having secured some 10 global clients such as General Motors and Renault-Nissan Alliance, we now need to extend sales volume,” the official said.
For both Samsung and LG, industry watchers say, lukewarm sales of electric cars globally are a headache to tackle in the coming years.
GM’s electric car Volt, which features LG batteries, currently sells some 2,000 units per month, far below the original sales target of some 60,000 vehicles annually.
“Samsung and LG also need to get ready for the entry of Chinese players with cheaper products. Companies could see real profits on electric-car batteries from as early as late 2016,” said an industry source.
By Lee Ji-yoon (
jylee@heraldcorp.com)
