February 18, 2019

BMW-CATL tie-up to undermine profits of Samsung SDI

PUBLISHED : July 02, 2018 - 14:56

UPDATED : July 02, 2018 - 16:21

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[THE INVESTOR] The latest electric vehicle battery supply deal between Chinese battery maker CATL and German carmaker BMW is expected to deal a blow to Samsung SDI, which had enjoyed an exclusive supply contract with the German car manufacturer over the past years.

In a recent announcement, BMW CEO Harald Kruger said the German company will receive battery cells worth 1 billion euros (US$1.16 billion) from CATL. The Chinese company’s battery cells are likely to be utilized for the next-generation EV iNEXT, which is scheduled to be launched in 2021.

The battery business unit of Samsung Group has been the sole EV battery supplier for the German company’s EVs, including the i3 and i8. BMW’s scheme to diversify its battery cell suppliers could undermine the profits of the Korean battery maker down the road, according to market watchers.

“Chinese battery companies backed by the local government have been growing much faster than previously expected, and they could pose a serious threat to Korean EV battery companies in the coming years,” said an industry source, who requested not to be named.

CATL is reportedly searching for locations to build a new battery factory in Europe with the help of the German state of Thuringia.

The latest deal came after the Chinese firm won a series of supply contracts with other top-tier carmakers, including Volkswagen and Daimler earlier this year.

CATL became the largest EV battery maker in the world last year thanks to high demand in the Chinese market, where the government is trying to replace traditional gasoline-powered cars with EVs, according to Kiwoom Investment & Securities.

Its market share stood at 17.8 percent while Samsung SDI, accounting for 5.5 percent, came fifth last year.

“Although CATL, as the largest EV battery maker, may have more market opportunities, Samsung SDI also boasts competitiveness based on its technical capacity,” said Kim Ji-san, an analyst from Kiwoom Investment & Securities, who forecast that 2021 when the Chinese government cuts subsidies for domestic battery makers will be the focal point for the Korean company to take the lead in the segment.

Samsung SDI's stock closed Monday at 214,000 won(US$191.11), the same as the prevoius day's closing price.

By Kim Young-won (

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