A new battery cell factory could be built in the United States by South Korea’s Samsung SDI Co to support the push of the country’s auto industry to shift to electrification, said reports quoting sources of the company with knowledge of the matter.

Negotiations with automakers including Stellantis, Amazon and Ford Motor-backed electric vehicle startup Rivian is being held by Samsung SDI, an affiliate of Samsung Electronics, for the supply of batteries that would be manufactured in its potentially factory in the US, said the reports.  

An investment of at least 3 trillion won ($2.62 billion) for making batteries for Stellantis and a minimum investment of 1 trillion won for batteries to be made for Rivian is being planned by the South Korean battery maker, said the reports.

Reports also said that no decision has been taken by Samsung SDI about whether to launch the US factory through a joint venture with auto companies or to start it as an independent manufacturing site.

The changes brought about in the United States-Mexico-Canada Agreement (USMCA) that came into effect last year and replaced the older North American Free Trade Agreement (NAFTA) which was inked in 1994 is reflected in the decision of the South Korean company to build its next plant in the US.  

Under the new vehicle component rules in the USMCA, vehicles need to have 75 per cent North American content compared to a threshold of 52.5 per cent under the older NAFTA agreement, so that they are not imposed any tariffs.

“We have been reviewing our expansion in the United States, but nothing has been decided yet,” a Samsung SDI spokesperson said, adding that the company cannot disclose details of talks with customers.

The South Korean battery maker makes electric vehicle batteries in its factories in South Korea, China and Hungary and supplies the batteries to auto companies such as BMW, Ford, Volvo and Volkswagen.

Separate plans to manufacture EV battery cells in the US have been already announced by the domestic rivals of Samsung SDI – LG Energy Solution and SK Innovation Co Ltd.

Stellantis, which is an entity that was formed by the merger of Italian-American group Fiat Chrysler and France’s PSA, has its own battery plant projects in France and in Germany – both of which are joint venture projects with a subsidiary of TotalEnergies.

There were reports earlier this week about Stellantis pushing ahead with a deal for building an EV battery plant in Italy. The carmaker has said it would take a decision on additional battery factories in Europe and in the U.S. this year.

Samsung SDI would supply battery cells for its vehicles, Rivian said in April.

(Adapted from CarAndBike.com)