By Cho Mu-hyun
Samsung Group, Korea’s largest conglomerate, is pushing its car battery business as its next growth engine.
The group’s heir apparent and Samsung Electronics’ chief operating officer (COO) Lee Jay-yong is currently forging stronger ties with the automobile industry, meeting top executives abroad.
Its electronic component maker Samsung SDI recently purchased shares owned by German-based Bosch of SB LiMotive, a joint company of the two firms that makes eco-friendly lithium-ion batteries for electric cars.
Through having sole control over the battery maker, Samsung SDI plans to speed up managerial decisions and aggressively promote its batteries, according to a Samsung SDI spokesman.
“The key technology of making electric batteries for automobiles is cell development and manufacturing technology, which is owned by SDI,” said the spokesman. The importance of “Electric cells” for automobile equipment manufacturers is rising and SDI has the industry’s best technology for it. We thought it would be more advantageous to protect the key technology by taking total control of SB LiMotive.”
He added that the buyout doesn’t affect the company’s strong relationship with Bosch, and the German partner will supply electric packs for clients in their joint agreement, while SDI continues making cells. “We have agreed on a business plan that is a win-win.” The Korean firm also plans to develop technology in making packs.
SB LiMotive was founded in 2008 and its factory at Ulsan produces 200,000 batteries for electric vehicles monthly, and plans to expand the capacity to 400,000 by 2013 and 1.5 million by 2015.
The move is part of a much larger picture drawn by Samsung to tap into the burgeoning electric car market as a battery supplier. The technology behemoth’s main power throughout its history has been manufacturing and engineering parts, proven in its dominance in making semiconductors, display panels among others, which is largely in demand worldwide. If played right, electric batteries could be its next cash-cow.
Samsung has stated early in the year during media briefings that Lee Jay-yong has laid plans to meet more officials of car manufacturers.
Lee, recently met with Carlos Ghosn, the chairman and chief executive of the Renault-Nissan Alliance.
The COO, accompanied by SDI CEO Park Sang-jin, visited BMW headquarters in Germany in February to meet with CEO Norbert Reithofer and discussed ways for more cooperation in electric batteries. Samsung is already intimate with BMW, having been named the exclusive supplier of battery packs to the German automobile giant in August, 2009. He also met with Siemens CEO Peter Loscher during the same visit, another high profile.
In May, he met with Martin Winterkorn, CEO of Volkswagen, in which he is speculated to have discusses batteries, semiconductors and organic light emitting diode (OLED) electric lights for cars, while Samsung said it was for “marketing purposes.”
Having already met with GM CEO Dan Akerson last year in October, he is meeting with CEO Alan Mullay of Ford, another American manufacturing giant, sometime in the second half of the year, which the Korean company is yet to specify.
All these automobile makers in talks are edging to roll-out mass produced electric vehicles in the future.
Lee’s profile has been increasing in recent years. In the Apple and Samsung patent dispute, he has been the one meeting with Tim Cook on the sidelines seeking a possible settlement.
“Lee Jae-yong is stepping up more and more as a leader for Samsung, and is trying to show exemplary business approaches to push the conglomerate forward,” said an industry official. “Being the company negotiator in boosting its battery profile is a good way to show that he is a capable leader, and the face of Samsung’s future, because environmental friendly batteries is one of Samsung’s key project for expansion.”
Boosting electric batteries, which the company believes will replace engines, is one of five projects (the others are medical, biologics, solar energy and OLED display panels) that Samsung plans to push to make it a stable revenue pipeline by 2020.