Samsung SDI Pursues Negotiations to Supply Batteries to Mercedes...European Production Base Review

*This content was translated by AI.

According to the industry on the 14th, Samsung SDI is pushing for battery supply to Mercedes-Benz's next-generation electric vehicles, and cooperation between the two companies is reportedly underway.

The two companies are discussing various cooperation measures over the supply of prismatic batteries to be installed in electric vehicles in 2028. According to the industry, Samsung SDI and Mercedes are holding last-minute consultations, including a plan to designate production bases or lines exclusively for Mercedes in Europe. In the process, Austria, Slovakia, and the Czech Republic are being mentioned as candidates for the new plant.

Samsung Electronics Chairman Lee Jae-yong has been in contact with Mercedes management since last year, and discussions on cooperation have accelerated. Chairman Lee and Samsung SDI President Choi Joo-sun detailed a battery supply plan with Mercedes-Benz during a meeting in Seoul in November last year and a business trip to Europe in March this year. Chairman Lee has been building a relationship with Mercedes since Daimler AG, and has expanded cooperation by supplying infotainment platforms to Mercedes-Benz electric vehicles through its battlefield subsidiary Harman.

When Samsung SDI cooperates with Mercedes, Samsung SDI batteries will be installed in Mercedes-Benz electric vehicles for the first time. The supply scale is expected to be around tens of gigawatt hours (GWh), and if a long-term contract is made, the order amount is estimated to be more than 10 trillion won. While Mercedes-Benz is expanding its electric vehicle lineup based on the Mercedes Modular Architecture (MMA) platform, Samsung SDI's batteries are likely to be applied as the platform adopts prismatic batteries.

Mercedes-Benz has previously procured batteries for various form factors such as pouch type, square type, and cylindrical type from various companies such as LG Energy Solution, SK On, CATL, and Parsis. However, securing prismatic batteries in Europe remained a challenge, and self-procurement plans through ACC (Automatic Cells Company) were disrupted by production delays and yield problems. ACC's French plant started at 13 GWh, but actual production was limited. Under these circumstances, Samsung SDI, which has prismatic batteries production capabilities in Europe, has emerged as an alternative.

The need to strengthen production and supply chains in Europe due to changes in policies such as the European Union's Industrial Acceleration Act (IAA) is also strengthening cooperation between Samsung SDI and Mercedes-Benz. Korean battery companies are in a situation where they have to increase the proportion of EU origin through long-term supply contracts, technical cooperation, and establishment of joint ventures (JVs).

If Samsung SDI's supply of Mercedes is completed, it will become a supplier of batteries to all three German premium automakers, following BMW and Volkswagen. Samsung SDI is also preparing to mass-produce 46-pie cylindrical batteries for BMW's Goed plant in Hungary, and LG Energy Solution has signed a 46-series cylindrical battery supply contract with Mercedes to supply more than 150GWh after 2028.

Mercedes-Benz has recently seen a rebound in electric vehicle sales, and its electric vehicle sales rose 11% year-on-year in the first quarter of this year to 50,400 units. As demand for batteries is increasing due to the expansion of the electric vehicle lineup and the recovery of sales, there is a possibility that the scale of cooperation with Samsung SDI will be further expanded.

An industry official said, "We have entered the final stage of the project in Europe, and the key is to establish a large-scale production base," adding, "It is not easy to control costs with a structure that brings in batteries from outside." Another official said, "Samsung SDI's Mercedes supply is a 2028 electric vehicle project, and the volume itself is large," adding, "There is a high possibility that large-scale orders will be won mainly by prismatic batteries."

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*This content was translated by AI.