Samsung SDI Sells Loss-Making Fuel Cell Division, Plows Additional ₩1 Trillion Into Lithium-Ion Battery Development

While its principal focus has been lithium-ion battery technology and renewable energy products, Samsung SDI — Samsung’s specialist clean energy subsidiary — actively peruses other forms of future energy products, like hydrogen fuel cell technology and advanced battery chemistries using cutting-edge technology like graphene nanotubes. Although some of these technologies may not be ready for the market yet, not paying attention to them could be detrimental to its future business prospects, especially if a sudden breakthrough in cost, energy density, or manufacturing techniques makes a previously unviable technology viable.

Samsung SDI is ditching hydrogen fuel cell technology for lithium-ion batteries.

Samsung SDI is ditching hydrogen fuel cell technology for lithium-ion batteries.

So when we tell you that Samsung SDI has just sold its fuel cell division because it is simply unprofitable (and presumably has no long-term chance of making a profit), we think the facts speak for themselves. Add in the news that it is also preparing to invest an additional ₩1 Trillion ($870 million) in lithium-ion battery technology, and we think there’s little doubt over the company’s view of hydrogen fuel cell technology.

Theres a gradual slowing of interest in hydrogen fuel cells.

The auto industry is slowly turning its attention away from hydrogen fuel cell technology

As Korea Times reported earlier this month, first on April 12 and then April 14, the South Korean firm is in the process of selling its entire hydrogen fuel cell manufacturing and research department to fellow South Korean company Kolon Industries. Although the official price has not been confirmed by either party, Korea Times claims the sale will be worth a “few million dollars.” Given the massive investment in lithium ion cell technology being planned by Samsung SDI and its unveiling earlier this year of a new energy-dense high-voltage lithium-ion battery pack that will offer up to 373 miles of range per charge in a mid-sized car, we think its future goals are very clear.

Electric vehicles are now a sure bet. Hydrogen fuel cell cars are not.

While Samsung SDI’s principal focus for hydrogen fuel cell technology was to develop methanol hydrogen fuel cells for notebook computers, something it developed more than a decade ago, lithium-ion cell technology proved far more popular and practical as well as being more efficient and cost-effective. Since then, Samsung SDI has considered its fuel cell research and development both with small-size hydrogen fuel cells for use in consumer gadgets as well as larger, more powerful units. But while Samsung SDI expects its lithium-ion battery technology to become profitable this year (at least in the small and mid-sized battery sector) its hydrogen fuel cell business was operating at a major loss.

Although its electric vehicle battery business is still operating a loss and is expected to do so until some time in 2018, company spokespeople indicate that Samsung SDI expects its new lithium-ion battery investment will further speed up the road to profitability.

“We will invest 3 trillion won in the [electric] car battery business by 2020 to make it one of the globally best businesses in the industry,” Samsung SDI chief executive Cho Nam-seong said earlier this year during a Samsung SDI shareholder meeting. While not quite the level of investment being planned by California automaker Tesla Motors and its lithium-ion technology partner Panasonic in the massive Gigafactory, Samsung’s planned investment should not be sneezed at.

With global electric car sales on the rise and more and more demand for longer-range electric cars, there’s plenty of space in the electric car battery market for Samsung SDI to turn a healthy profit. With its Ulsan and Xian production facilities already producing enough lithium-ion cells for 200,000 electric cars per year — many of which are used in BMW electric cars — Samsung is perfectly poised to benefit from increased electric car battery demand.

Samsung already provides lithium-ion batteries to several automakers, including BMW.

Samsung already provides lithium-ion batteries to several automakers, including BMW.

Samsung SDI isn’t alone in rethinking the importance of hydrogen fuel cell technology. While Japanese automaker Toyota is still focused almost entirely on making hydrogen fuel cell technology the fuel source of the future, its nearest rival Honda is has visibly cooled toward hydrogen fuel cells. While it still plans on bringing hydrogen fuel cell cars like the upcoming 2016 Clarity FCV to market, Honda now envisages a future with hydrogen fuel cell technology operating alongside electric and plug-in hybrid vehicles. To that end, it recently announced its intent to offer the Clarity as a hydrogen fuel cell sedan, plug-in hybrid sedan, and all-electric sedan.

Similarly, South Korean automaker Hyundai and its sister company Kia have developed a  similar plan. Initially dismissive of electric vehicles in favor of hydrogen fuel cell technology, they too have shifted focus towards a more varied portfolio in which battery electric, plug-in hybrid and hydrogen fuel cell are offered side by side.

At that point, the market — or rather the buyers — decide which is best.


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