Normalization in China
On January 24, Samsung SDI said that there was still strong uncertainty about its struggling electric car battery business in China and forecast that it will be normalized by 2020.
“Battery subsidies for electric cars in China have shrunk dramatically this year, and will gradually decline and vanish in 2020 or by 2021 at the latest," said Kim Hong-kyung, a managing director of Samsung SDI in a conference call after the announcement of the announcement of the company’s earnings in the fourth quarter of last year. “Beginning at that time, we will be able to normalize our electric car battery business in China.”
Samsung SDI said the company was having difficulty in operating its Xian, China plant due to issues over battery subsidies for electric vehicles in China. "Its operation rate was low, investment in the plant was put on hold and its human resources were cut back on," Kim said. “It is difficult to improve the situation immediately. But we predict that as we will secure automobile battery export volumes from Europe and export them beginning in March this year, the operating rate will rise.” As the export volumes will continue to swell in 2018 as well, the Xian plant will continue to run regardless of local sales. However, investment will decline because the increase will be eclipsed by local volumes."
On the other hand, regarding the fact that Samsung Electronics pointed out a battery defect as what caused the Galaxy Note 7 to catch fire, Kim said, "I have no particular different opinion." “Samsung Electronics president Koh Dong-jin’s remarks are about legal responsibility. The loss of reserves is a contractual matter so it will proceed regardless of a lawsuit,” Kim said in reference to president Koh’s statement that Samsung Electronics will not hold battery suppliers legally responsible. “We will solve the problem by deliberating with Samsung Electronics to prevent legal problems concerning the loss from arising.”