LG Chem, Samsung SDI expected to pick up steam

By Park Jin-hai

Share prices of LG Chem and Samsung SDI, two major vehicle battery suppliers, closed sharply higher Wednesday on expectations that they will provide more batteries to Nissan and other global automakers, according to analysts.

LG Chem closed up 2.81 percent, or 7,500 won, at 274,000 won. Samsung SDI ended up 3.42 percent, or 5,000 won, at 151,000 won. The KOSPI closed up 0.96 percent, or 19.69 points, at 2,062.61.

Their gains were boosted by the reports that Renault Nissan’s CEO Carlos Ghosn said that the Japanese automaker is considering purchasing LG Chem’s batteries for Nissan’s future electric vehicles (EV).

The firm already closed a deal to jointly develop next generation EV batteries with Renault in May.

LG Chem supplies its car batteries to more than 20 global carmakers including Audi, General Motors, Ford and Chrysler.

Ghosn was quoted as saying Nissan is preparing to cut in-house battery manufacturing and follow Renault in buying cheaper batteries from LG Chem for future vehicles, including models made in China.

Samsung SDI shares were boosted as well on the news that it has supplied 25,600 lithium-manganese cells for Europe’s first 5-megawatt utility scale battery energy storage in Schwerin, Germany.

The company signed a contract to provide its batteries for BMW’s electric vehicles.

Analysts bet that their bottom lines will improve in the coming years as they have advanced rechargeable battery technology,

“LG Chem has successfully developed a 48-volt lithium-ion battery. The LG-patented battery will be supplied to major carmakers including Audi,” said Son Ji-woo, analyst at SK Securities.

The market is moving from conventional lead-acid starter/stop-start batteries to the 48-volt lithium-ion batteries, creating a new market worth $1.5 billion this year, growing to $6.8 billion by 2020, according to market research institution B3

“The company is well positioned to reap the first-mover advantage, when the demand for EV cars in China actually picks up,” he added.

In the United States, General Motor’s EV Chevy Volt had its best month ever in August, with 3,351 bei8ng sold. This year, the Nissan Leaf is going to set its own best-ever record with 3,186 vehicles sold.

“The monthly EV sales in North America have been over 11,000 for three straight months. Their global monthly sales growth has posted 17 percent on average this year. Thus, the battery shares will remain strong for the moment,” said Hwang Jun-ho, an analyst at KDB Dawoo Securities.

LG Chem, as the top EV battery manufacturer, has signed contracts with 30 global carmakers.

With the Renault Nissan alliance, an LG executive said the size of the supply contract will be “substantial,” but didn’t reveal the specific number.

Nissan Korea said that nothing is confirmed as yet about expanding a deal with LG Chem.

Under Ghosn’s leadership, Renault Nissan has bet more on electric cars than any mainstream competitor.

“When Nissan chooses LG Chem batteries, it is tantamount to saying the Korean battery maker’s technology and cost competitiveness is the best. Given the trend of a weaker yen which undermines local exporters’ price competitiveness abroad, it is no small feat for LG Chem,” said Shin Chung-kwan, an analyst at KB Investment and Securities.