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Samsung Making Paltry 1% Profit On EV Batteries

With electric vehicles promising a brighter future for all, it might come as a shock to learn Samsung SDI only gain one cent in the dollar profit from manufacturing batteries for them – and that is only set to worsen with the continuing global chip shortage.

When compared to the 30.4 cents on the dollar Samsung made from chips sold between July and September this year, it seems obvious why the South Korean giants are investing US$17 billion to build a second chip plant in the US rather than an EV battery factory.

With each EV requiring US$900 in chips, almost double what’s needed for a regular ride, and the impact the semiconductor shortage is having on that, South Korean battery firms including Samsung SDI have no choice but to ease production, resulting in losses.

Making the situation even trickier is that EV batteries – which use expensive metals such as cobalt, nickel and manganese as raw materials – actually have a limited shelf life before they deteriorate, so they have to be delivered to car makers on time. That means stocking them up to sell later isn’t an option.

Interestingly, the measly one per cent profit Samsung SDI made this year was actually the first time they showed a profit, losing US$1.7 billion between 2012 and 2019.

In a ray of light, experts are predicting profitability for South Korean battery makers to rise to five per cent as EV vehicles become more widespread, as they are more profitable than regular cars.

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