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Samsung Buys BYD’s 4% Shares for $500 Million

published: 2016-07-22 16:31

China’s booming electric vehicle (EV) market attracted eager foreign investors. Samsung Electronics’ China branch was said to buy news shares of China’s largest EV manufacturer BYD for RMB 3 billion (around US $500 million) and to secure 4 percent stake of BYD.

According to Korea Economic Daily and Nikkei, Samsung Electronics announced on July 15th that it would invest RMB 3 billion into BYD for 4% share of BYD. Nonetheless, BYD denied the amount of investment in the afternoon on the same day.

As China’s largest EV manufacturer, BYD is prospering

BYD had successfully sold 61,772 units of new energy vehicles (EV and PHEV) in 2015, and its revenue totaled RMB 77.6 billion. In China, BYD’s current market share is around 30%. Because China’s central government continues to promote using EVs, BYD set a target of doubling its sales in 2016. Meanwhile, BYD’s component demand rose as a result.

BYD was established in 1995. Its business groups included EV, general vehicles, IT, and new energy. BYD have been manufacturing EV-use batteries for its own EV/PHEV products. This fact made BYD be one of the few companies in China that can integrate new energy generation, energy storage system, and EV businesses.

Samsung actively developed the EV market

Samsung group has frequently developed itself in the EV market. In December 2015, Samsung Electronics set up a division that devoted in producing next-generation automotive components, such as automotive semiconductor, EV batteries, and automotive displays. Furthermore, this division aimed to develop self-driving cars and connected cars.

Regarding this investment into BYD, Samsung expressed that the goal is to enhance collaboration in capitals and component supplies for forcefully advancing in the rising EV market in China. Nevertheless, Samsung emphasized that it would not get involved in operating and managing BYD. Samsung merely invested financially.

Aside from investing in BYD, Samsung SDI, a subsidiary of Samsung Group, invested in an energy storage system factory (in Hefei, China) along with China’s inverter giant Sungrow. The energy storage system factory’s annual capacity is 2,000MWh and its first phase of mass production already started.

What’s more, Samsung SDI applied to be on the list of EV automobile battery subsidy of China’s Ministry of Industry and Information Technology (MIIT), but was rejected. If Samsung SDI likes to boost business in the China market, it is a must to collaborate with China’s local business.

Samsung was not the first foreign investor to BYD. The famous USA investor Warren Buffett's Berkshire Hathaway Inc. took a nearly 10% stake of BYD in 2008. Additionally, Apple announced to invest US $1 billion in Didi Chuxing, China’s biggest ride-hailing service, on May 12th. Apple’s move added pressure to Samsung in China’s transportation industry competition.

(Author: Rhea Tsao, Chief Editor of EnergyTrend. Translator: Janet Chen, transaltor at TrendForce Corp.)

 (Picture: BYD’s new energy vehicle “Yuan”. Source: BYD)

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