Hungarian Minster Peter Szijjarto of Foreign Affairs and Trade and Vice President Jeong She-woong of Samsung SDI, Automotive & ESS Business Division announced Samsung SDI’s investment plan for battery plant construction in Hungary.

Samsung SDI has designated Hungary as the foothold for producing batteries in Europe and launched construction of its plant. 

The new facility in Hungary will enable Samsung SDI to establish a triangular production structure along with existing plants in Ulsan, Korea and Xian, China.

Hungarian Minster Peter Szijjarto of Foreign Affairs and Trade and Vice President Jeong She-woong of Samsung SDI Automotive & ESS Business Division made announcement on SDI’s investment plan for battery plant construction in Hungary on Aug. 30. Aiming to start commercial production in the second half of 2018, the company will build production lines with annual capacity of batteries for 50,000 pure electric vehicles, investing around 400 billion won.

The government of Hungary expressed strong commitment in supporting Samsung SDI’s activities in Hungary in order to ensure smooth implementation of the project. The new battery plant of Samsung SDI will be built in Goed, located 25 kilometers north of Budapest, on a site of about 330,000 square meters by utilizing existing facilities previously used for display production.

As it can use a large portion of existing plant infrastructure, Samsung SDI is expected to generate profit sooner than usual by reducing its construction period and costs.

The company initially built the plant in Hungary in 2001 to manufacture cathode ray tubes (CRTs) and remodeled it for PDP production several years thereafter.

In addition, the plant in Hungary will enable the company to significantly reduce logistics costs while immediately responding to demand from customers, since production bases of European automotive manufacturers are concentrated in Central and Eastern Europe. Moreover, the company will be able to sharpen its competitive edge in automotive the battery industry by establishing an integrated production system ranging from battery cells to packs, generating synergy with SDIBS (SDI Battery Systems, Austria), the production base of battery packs it acquired last year. 

“By launching construction for the plant in Hungary, we now can set up the global triangular production structure for electric vehicle batteries. We can especially provide higher quality services to European customers in Europe by generating synergy with SDIBS,” said Executive Vice President Jeong She-woong & Head of Automotive & ESS Business division.

Samsung SDI entered the EV battery business in 2009. 

The company has so far poured more than 1 trillion won, but it has suffered losses. Samsung SDI posted 400 billion won in sales last year, and business sources expect the company to reach a break-even point in 2018. Its outlook is rosy. 

The Japanese market survey company B3 said the global EV battery market is forecast to surge from 2.63 million units this year to 4.86 million units in 2020. Volkswagen’s rigging of exhaust fume systems is expected to help such eco-friendly cars as EVs get a boost in demand. 

Samsung SDI is making massive investments to gain an upper hand over the rising EV battery market. The company plans to raise its investments to a combined 3 trillion won to expand its capacity to 10 times more than current levels. Samsung SDI expanded the Ulsan plant last year, and the company dedicated the Xian plant last October. 

By strengthening regulations on MCM/MCA EV batteries, Chinese authorities have made it difficult to operate the Xian plant. Foreign MCM/MCA EV battery makers, including Samsung SDI, have been excluded from the beneficiaries of subsidies. 

The company has no options but to seek a strategy of making inroads into Europe. Samsung SDI is preparing for the expansion of its U.S. plant.

A bird-eye view of a battery plant Samsung SDI will build in Hungary. (Photos: Samsung SDI)