LG Chem to supply batteries for BMW EVs

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LG Chem to supply batteries for BMW EVs

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LG Chem will supply next-generation hybrid vehicle batteries, including micro-hybrid vehicles (μHEV). BMW currently uses Samsung batteries for its i3 electric vehicle (EV), above. Provided by BMW

LG Chem is close to a deal to supply batteries for BMW’s hybrid vehicles in the future, according to industry sources on Monday.

Samsung SDI has been the automaker’s exclusive supplier of battery packs for its i3 electric vehicle (EV) since 2009.

But it appears that LG is penetrating into the secondary battery business for next-generation vehicles, in which Samsung has been performing well.

LG Chem and BMW will sign a contract in the first half of this year, the industry insiders say. LG is expected to supply BMW with batteries for next-generation hybrid vehicles, including micro-hybrid vehicles (μHEV).

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Instead of using the 12-volt lead storage battery, which BMW’s EVs currently require, the μHEV uses a 48-volt lithium-ion battery to improve fuel efficiency.

Using high voltage as a power source allows automakers to operate not only engines, but also electronics, including navigation systems.

LG Chem signed a contract with Audi last August to supply batteries for plug-in hybrids (PHEVs) and μHEVs.

If BMW uses LG Chem’s products, it would mean six out of the world’s top 10 automakers - GM, Renault-Nissan Alliance, Hyundai Motor Group (Hyundai Motor and Kia Motors) and Ford - would be customers of the company. About 100,000 units of Hyundai Motor’s Sonata hybrid, for instance, have used LG Chem batteries since they were introduced in June 2011.

“The ratio of using the 48-volt battery is increasing recently as a series of electronic control systems has been added to cars,” said an executive working at a foreign automaker. “The collaboration between BMW, the world’s leader in the electric vehicle business, and LG Chem, the world’s No. 1 battery manufacturer, will definitely create some synergy.”

LG Chem’s move isn’t good news for Samsung SDI, which has been supplying EV batteries for BMW while trying to improve its competitiveness in the market. Samsung Electronics’ Vice Chairman Jay Y. Lee, 47, has showed interest in the business by ordering BMW’s new PHEV i8, which will be introduced in Korea next month.

Competition between the two companies in technology development is intense. Samsung SDI generally produces a can-shaped, flat battery, while LG Chem manufactures pouch-shaped batteries that look like aluminum film. Both claim their technology is better.

“LG Chem’s pouch-shaped batteries are favored by designers of automakers because of their thin shape that can be installed inside a smartphone, while Samsung’s can-shaped batteries can safely store lithium-ion,” said a spokesman in the industry.

“I think the fate of two battery makers hinges on global automakers’ decisions.”

BY KIM YOUNG-MIN AND KWON SANG-SOO [kwon.sangsoo@joongang.co.kr]

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