Hyundai Heavy enters electric car battery biz

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Hyundai Heavy enters electric car battery biz

Hyundai Heavy Industries is jumping into the electric vehicle (EV) battery market, barging into the current three-way competition in the local market.

HHI, the largest shipbuilder in the world, said Monday it will set up a joint venture with Canada-based Magna E-Car to manufacture batteries for eco-friendly vehicles as part of its green and renewable energy business.

The company said the joint venture will start producing 10,000 packs of EV batteries from 2014.

The 40-year-old shipbuilder is trying to diversify its business portfolio by investing 90 billion won ($80.2 million) into the new area. Starting with the battery sector, HHI plans to expand into the photovoltaic and wind power markets, although the two markets have been in recession during the last two years.

Magna E-Car, based in Ontario, is known to have been conducting studies on development of cells on its own. It started testing actual production of cells from last year.

HHI will ride on the cell development process done by Magna, which gives an advantage to the newcomer in the battery market.

The Korean heavy industry giant chose the Canadian firm in order to make inroads into the North American market. Although it is jumping into the battery business belatedly, the Korean company is targeting the U.S. auto market, which it considers more promising for green car-related businesses than the local market.

“Starting from 10,000 packs in 2014, our battery production will increase to 400,000 packs in 2018 and 800,000 packs in 2020,” the company said.

It aims to have a 30 percent share of the U.S. EV market by 2020.

HHI’s entry is likely to reshape the domestic EV battery market. One of the largest Hyundai Group affiliates, the company is considered a strong contender in the Korean EV battery market, which has been led by Samsung SDI, LG Chem and SK Innovation.

LG Chem, in collaboration with parts maker Hyundai Mobis, is the only Korean company that has begun mass producing batteries for electric cars of General Motors, Ford, Hyundai Motor Group and Volvo. SB LiMotive, a joint venture between Samsung SDI and German auto parts maker Bosch, has signed a contract to supply batteries for BMW and Chrysler. SK Innovation has forged a partnership with German auto parts maker Continental to start production of EV batteries.

Some market analysts say the entry of such a large subsidiary of the second-largest family-run conglomerate will have a significant impact on the local market. HHI is expected to build the battery business in cooperation with Hyundai Motor, which will give it a competitive edge over battery makers without an auto-making affiliate.

If Hyundai Motor opts for Hyundai Heavy’s batteries, this would be a game-changer in the market, according to some market analysts.

“The partnership between LG Chem and Hyundai Mobis can’t be guaranteed,” said an analyst on the condition of anonymity.

“Since we are already supplying batteries for 10 automakers, [HHI’s entry] won’t affect our business,” an official at LG Chem said.


By Song Su-hyun [ssh@joongang.co.kr]

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