Samsung SDI Accelerates Expansion of Hungarian Factory with 1,6 Tril Won Capital Increase

Samsung SDI Accelerates Expansion of Hungarian Factory with 1,6 Tril Won Capital Increase

Samsung SDI has begun a major expansion and renovation of its Hungarian factory to supply prismatic batteries for Hyundai and Kia’s European electric vehicles (EVs). After successfully raising 1.65 trillion won through a capital increase, the company plans to expand its production facilities and target the European market, where EV sales recovery is relatively fast, aiming to overcome the chasm (temporary demand slowdown) early.

According to industry insiders, Samsung SDI has started expansion work on its factory in Göd, Hungary. The company announced plans to renovate the first factory and expand the second factory using funds secured through the capital increase, and is now moving quickly to implement these plans. Samsung SDI’s recent rights offering to its employee stock ownership association and existing shareholders exceeded a 100% subscription rate, with 1.65 trillion won in new funds set to be injected on May 30. The company plans to invest 323.6 billion won of the secured capital in the Hungarian factory to significantly upgrade production facilities.

The Hungarian factory is Samsung SDI’s core base in Europe, established with an investment of over 2 trillion won. In 2017, the company invested about 960 billion won to convert a factory that previously produced cathode-ray tubes into an EV battery factory. Subsequently, it invested over 1 trillion won more to complete the second factory at the end of 2022, securing the capacity to produce batteries for about 600,000 mid-size vehicles, equivalent to 40GWh (gigawatt-hours).

Samsung SDI currently produces two versions of prismatic batteries at the Hungarian factory. The first factory uses a winding method where electrode materials are rolled and inserted into cans, while the second factory produces batteries using a stacking method where materials are layered. New supply contracts are primarily focused on stacked batteries, which have higher energy density.

Samsung SDI plans to transform the Hungarian factory into a dedicated production facility for prismatic batteries using the stacking method. Accordingly, the first factory will be converted to produce batteries using the stacking method. Furthermore, the company has decided to expand the production capacity of the second factory.

The background for Samsung SDI’s capital increase and expansion/renovation of the Hungarian factory lies in the European market, where EV sales are rapidly increasing due to stricter environmental regulations. Since January, the European Union (EU) has been regulating the average carbon dioxide emissions of new cars to 93.6g per kilometer. Automakers exceeding the emission standards must pay a fine of 95 euros (150,000 won) per gram. To avoid these regulations, automakers are increasing EV sales and accelerating the launch of affordable electric vehicles.

Industry experts are analyzing the impact of environmental regulations, saying,

Regulations have suppressed the chasm.

According to SNE Research, EV deliveries in the European market in the first quarter of this year were about 898,000 units (including PHEVs), a 22.8% increase compared to the same period last year. Samsung SDI is also rapidly increasing the production capacity of its Hungarian factory in line with changes in the European EV market.

Samsung SDI has also secured an opportunity to overcome the prolonged chasm based on the European market. The company will start supplying batteries for Hyundai and Kia’s European EVs from next year. The industry expects Samsung SDI to supply batteries for about 500,000 vehicles to Hyundai and Kia by 2032.

Samsung SDI is expected to see rapid sales growth as it secures Hyundai and Kia as customers in Europe, in addition to BMW and Volkswagen, where EV sales are increasing.

An industry official said,

Automakers are focusing on EV sales because they have to pay huge fines if they don’t meet Europe’s carbon emission standards,

Adding,

Europe’s carbon emission regulations could be an opportunity to overcome the chasm.

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Samsung SDI Accelerates Expansion of Hungarian Factory with 1,6 Tril Won Capital Increase, source