Samsung SDI to produce square batteries for electric vehicles for Volkswagen

According to foreign media reports, South Korean battery maker Samsung SDI has won an order from Germany's Volkswagen to become its contract manufacturer of electric vehicle batteries. It is reported that Samsung SDI will be responsible for part of the production of Volkswagen's self-designed unified square battery (Unified Prismatic Cell). But it is not clear whether Samsung SDI is the only contract manufacturer of the battery.

It is possible that Gotion High-Tech and Northvolt of Sweden will also be involved in the production. Volkswagen is the largest shareholder in Guoxuan Tech and has a stake in Northvolt.

Volkswagen is likely to provide Samsung SDI, with the specifications and functions of the square batteries it needs, so Samsung SDI may not only be a contract manufacturer, but will also be involved in design and manufacturing. This will be similar to Tesla handing over the basic design work of its self-driving car SoC to Samsung Electronics.

The deal will give Samsung SDI an opportunity to increase a stable source of revenue. Volkswagen is Samsung SDI's largest battery customer for electric cars, accounting for about 50 per cent of its business sales, or 5 trillion won, while BMW accounts for about 30 per cent.

In the future, sales of electric car startup Rivian in South Korea are also expected to continue to grow. Samsung SDI will provide Volkswagen with large batteries such as square batteries, as well as small batteries such as cylindrical batteries for BMW and Rivian. The use of cylindrical batteries has increased because Tesla used cylindrical batteries in his car model. In addition, Samsung SDI will work with BMW to develop the next generation of cylinder batteries.

At the same time, Volkswagen has said it plans to build six battery plants in Europe with a capacity of 240GW by 2030 and plans to use its square batteries from 2023. By 2030, 80% of Volkswagen's electric cars will use such batteries, while Volkswagen plans to reduce battery manufacturing costs by 50%.