Samsung SDI partners up with Stellantis for joint battery factory in US

Samsung SDI has signed an agreement with Stellantis to form a joint venture to build an electric vehicle battery factory in the United States, industry sources said Tuesday.

Samsung SDI’s move draws a parallel with LG Energy Solution, which announced a day earlier that it would a create a joint venture with the same global auto group and construct a 40 gigawatt-hour EV battery plant in the US.

While details remain unclear, such as the monetary value of the partnership deal, Stellantis is likely to become the first automaker that Samsung SDI forms a joint venture with. Also, the world’s No. 4 automaker is expected to provide a channel for Samsung SDI to seek expansion in the US, as the South Korean battery manufacturer still doesn’t have a battery production base in the country.

The joint battery factory will allow Samsung SDI to circumvent a tariff imposed in accordance with the United States-Mexico-Canada Agreement, which took effect last year. Under the USMCA, vehicles must contain 75 percent North American components -- including batteries, or they will face tariffs in the region starting 2025.

As battery plants typically take two to three years to complete, this year was the last opportunity for Samsung SDI to meet the 2025 threshold.

The new battery plant will increase the number of Samsung SDI’s global production bases to four. The three it has now are in Ulsan, China’s Xian, and Hungary’s God.

Samsung SDI currently supplies its batteries to Stellantis brands such as Jeep and Fiat. The Jeep Wrangler 4xe, a model that became famous after President Joe Biden test drove it, is powered by Samsung SDI batteries.

Stellantis, launched after the merger of Fiat Chrysler Automobiles and French auto giant PSA earlier this year, aims to pour 30 billion euros ($34.9 billion) into electrification by 2025.

It’s unknown which type of batteries the joint factory will manufacture. One of the most advanced in Samsung SDI’s product portfolio is a Gen5 NCA (nickel cobalt aluminum) lithium-ion battery with a nickel ratio of 88 percent that can offer a driving range of 600 kilometers in a single charge.

Meanwhile, Samsung SDI last month unveiled a plan to mass produce next-generation solid-state batteries that would exhibit a range of 900 kilometers.

By Kim Byung-wook (kbw@heraldcorp.com)