Samsung SDI has signed a preliminary agreement to build a factory in China dedicated to the production of electric car batteries.
The South Korean firm, which also makes smartphone batteries and television displays, is investing in electric vehicles (EVs) after the Chinese central government revealed a target to place five million new EVs and hybrids -- cars which use both electric and fossil fuel sources -- on the road by 2020.
Backed by government subsidy, the Samsung Electronics affiliate could grant the firm an early start in dominating a market soon to boom -- if Chinese officials have their way. Such a target, complete with subsidies for manufacturers and consumer financial lures, could make China one of the largest EV markets worldwide.
Samsung SDI will form a joint venture with an unnamed, government-owned firm in the Shannxi Province and autoparts maker Anqing Ring New Group. The company will contribute $600 million in to the factory's construction over the next five years.
Samsung SDI hopes to being production at the factory next year.
Through the deal, Samsung SDI "gains a foothold in executing its strategy targeting the world’s largest electric car market," said Sangjin Park, President and CEO of Samsung SDI. "We will use the opportunity to grow into the world's No. 1 company not only in small-sized batteries, but also in the medium- and large-sized battery segments."
Image credit: Nissan