There is a prediction that there is a setback with supply of large-scale electric vehicle batteries from Samsung SDI to Volkswagen.
Bloomberg reported on the 27th that Volksagen may change its supply agreement worth $55.8 billion (66.3 trillion KRW) with Samsung SDI after being concerned that there may be a setback with supply of batteries.
According to the report, while Volkswagen and Samsung agreed on supply of 20GWh worth of batteries, Samsung SDI will instead supply 5GWh worth of batteries at the moment due to disagreement on output and schedule while they were discussing about detailed terms.
“Samsung will continue to remain as our supplier for battery cells.” said Volkswagen to Bloomberg while stating that it will continue to maintain its partnership with Samsung. Regarding this report, a representative for Samsung SDI stated that Samsung SDI cannot confirm any information regarding its partners.
There have been constant talks amongst industries that there have been setbacks with supply agreement for electric vehicle batteries that Samsung SDI won from Volkswagen in 2018. Although there needs to be large-scale investments from Samsung SDI to supply batteries for electric vehicles that are expected to be released in 2020, Samsung SDI has been showing more conservative approach than its competitors towards new investment.
“We cannot agree with opinions that believe that our investments into car batteries are either slower or more conservative than other markets.” said Samsung SDI during its first quarter performance announcement that took place last month. “We are continuing to obtain contracts from high-ranking customers according to market growth and we are focused on continuing qualitative growth by looking into potential risks from each project.”
Some say that electric vehicle battery market directly shows an aspect of changing itself into a ‘seller’s market’.. While electric vehicle market is growing rapidly, there are not many battery manufacturers with appropriate production capacity and technical skill.
“Because initial supply for Volkswagen’s MEB platform was signed while there was not any agreement made, there was a controversy on low-cost orders continuously.” said a representative for the industry. “As a result, there is a setback with Volkswagen’s electric vehicles that are expected to be released in 2020.”
“Unlike other competitors, Samsung SDI focuses on profitability of a contract rather than the size of a contract.” said Director Kim Byung-joo of SNE Research. “It seems that battery manufacturers hold bargaining power within secondary battery market.”
Volksagen having its own plan for battery production is related to Volkswagen wanting stable supply of batteries. There is a report that Volkswagen recently invested $1.12 billion (1 billion euros) to construct battery production lines in Sweden and Germany. It is confirmed that Volkswagen is also looking to set up a joint corporate with SK Innovation.
“We are currently discussing with Volkswagen about setting up a joint venture.” said President Yoon Yae-seon of SK Innovation’s Battery Business. “Reason why Volkswagen is wanting to set up a joint venture is because it wants stable supply of batteries.”
Volkswagen is one of automotive manufacturers that is very active in converting its vehicles into electric vehicles. Starting with third-generation ID3 this year, it is planning to release 50 new electric vehicles. To achieve its goal, it needs 300GWh batteries within ten years. After selecting LG Chem as a battery supplier for its MEB (Modular Electric Drive) platform in 2017, it made partnership with Samsung SDI and CATL in 2018 and added SK Innovation as its partner for North American market.
Staff Reporter Jung, Hyunjung | firstname.lastname@example.org