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Samsung SDI expects little impact from battery woes in China

[THE INVESTOR] Samsung SDI, the battery-making unit of Samsung Group, said on July 28 that the company sees little impact from its recent battery woes in China where the government is tightening subsidies for electric vehicles.

“It is true that we saw weaker sales in China than planned but most of the market uncertainties will be removed in the latter half of this year,” said a company official during a conference call on July 28.

“There is clear demand for high quality batteries among Chinese clients. We are already talking with them about increasing orders in the coming months.”

 
Samsung SDI’s EV battery plant in Xian, China.
Samsung SDI’s EV battery plant in Xian, China.


Early this year, the Chinese government suspended subsidies for electric buses using nickel-manganese-cobalt-oxide batteries, or NMC, that are produced by leading battery makers like Samsung. Even though they are more advanced batteries, the authorities are offering subsidies only to Chinese alternative lithium-ion-phosphate batteries, or LFP, citing safety issues.

The company is also undergoing the Chinese government’s toughened evaluation of companies subject to new EV subsidies that take effect form 2018. It failed to make it in the latest fourth evaluation session but it showed confidence in passing the upcoming fifth session.

“We could fill up the Chinese loss with increased battery orders in Europe, including those for the upcoming next-generation BMW i3,” the official added.

In its earnings report on the day, Samsung SDI posted an operating loss of 54.2 billion won (US$48.13 million) in the April-June period, which compared to 58.81 billion won losses a year ago.

Sales stood at 1.31 trillion won, up 11.95 percent on-year.

By Lee Ji-yoon (jylee@heraldcorp.com)
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