Samsung SDI to expand battery output in China

South Korea's Samsung SDI plans to invest 1.3 trillion won ($1.15bn) to expand its battery production in China to capitalise on growing demand for electric vehicles (EVs) and other applications.

Plans call for initially expanding a factory in northeast China's Tianjin to boost output of cylindrical batteries for EVs, power tools and electronic devices. Samsung SDI also intends to expand its plant in Shaanxi province's Xi'an that produces batters for EVs and energy storage systems, but plans for that project have yet to be finalised.

Samsung SDI declined to disclose a timeline for the expansions or figures for production capacity. The Tianjin project, which will include three new production lines, will possibly be completed in next year's first half. The Xi'an expansion could be much larger in scope adding two new plants to Samsung SDI's complex and accounting for about 70pc of the W1.3 trillion investment.

The existing Xi'an plant can produce enough batteries for about 30,000 to 40,000 EVs annually. But since opening in September 2015, sales have been held back by the exclusion of EVs with batteries made by South Korean companies from generous government subsidies. Samsung SDI last year tabled plans to expand the Xi'an plant because being put at a competitive disadvantage through the subsidy programme left the company unable to compete effectively for supply contracts.

China's EV subsidies are scheduled to expire in 2020, which will create a level playing field and open the door for Samsung SDI and its South Korean rivals, LG Chem and SK Innovation, to capture larger shares of the world's biggest EV market.

South Korean battery producers are following a strategy of building up manufacturing bases in their home country, China, Europe and the US. Samsung SDI late last month approved $62mn in investment to expand its EV component factory in Auburn Hills, Michigan.

The number of EVs in use globally rose by 54pc in 2017 to 3.1mn, led by gains in China. The IEA predicts that this will climb to about 125mn by 2030.