Challenges and Hurdles
Major Korean companies such as LG, Samsung, and SK are accelerating their moves such as their investments in the business of electronic devices for future cars.
According to industry sources on March 12, LG Chem is preparing to build a battery plant at its Michigan plant in response to GM's move to expand production of electric vehicles.
Marry Barra, CEO of GM said earlier this year that GM would increase production of the Chevrolet Bolt in the Orion assembly line near Detroit. Considering that the Volt receives 11 core parts, including batteries, from LG Electronics, it is expected to have a positive impact on profitability of LG Electronics’s VC division. LG Electronics is planning to complete an auto parts factory in Michigan in the first quarter.
Samsung is also aggressive in its electronic automotive parts business with including subsidiaries Harman and Samsung SDI front and center. Harman unveiled car audio and next generation infotainment systems applied to Kia Motors, Audi, Bentley, Lamborghini, Ford, Alfa Romeo, BMW, Maserati and Mercedes-Benz at the Geneva Motor Show on March 6. In addition, BMW will start offering services to its buyers to open doors of its cars with Samsung smartphones this July.
Moreover, SK Innovation recently began to construct a battery plant for electric cars. In 2022, the company will be able to supply batteries for 125,000 vehicles which can run 500km on one charge per year. SK Networks signed a memorandum of understanding (MOU) with Parking Cloud, which provides real-time parking space information and mobile payment services. SK Telecom informed the world of its self-driving car technology which received a temporary permit in Korea at the Mobile World Congress 2018.
Major business groups are aggressively investing in the electronic automotive device business. LG Chem plans to ramp up its investment in facilities 52 percent to 3.8 trillion won (US$3.4 billion) and in research and development (R&D) 22.2 percent to 1.1 trillion won (US$990 million) from a year before.
Samsung Electronics is seeking opportunities for mergers and acquisitions (M&As) related to the electronic automotive device business by holding the Samsung Innovation Summit in Israel on March 11 (local time). Samsung SDI is expected to invest more than 200 billion won this year to expand its cylindrical battery production plant which produces not only small batteries but also batteries for electric vehicles. SK Innovation will fork out 840.2 billion in the construction of a new electric car battery plant in Hungary, 200 billion won in a facility to produce lithium-ion battery separators (LiBSs) for electric vehicles and a battery plant in Seosan.
The industry expects that as the electric car market is growing rapidly and major Korean corporations have strong will for the business, they will have a bigger influence on the market. According to the Korea International Trade Association (KITA), exports of electric cars and energy new industry items (batteries for electric cars, etc.) grew 560.0 percent and 152.8 percent from 2014, respectively.
"Korea is the best place to commercialize electric cars considering its narrow land, high-speed communication networks such as 5G networks and electric power infrastructure," an industry official said. “However, Koreas has some hurdles to clear such as China's protectionism including the recent elimination of battery subsidies for Korean electric car batteries and a small electric car market (13,724 units were sold in Korea last year), which is only one-fifth of the Chinese electric car market and Korea’s autonomous navigation software power weaker compared to its hardware power.”