Samsung SDI share prices drop as its EV battery plans go against the grain

Samsung SDI stock prices dropped 3.91% at the beginning of the week after brokerage firm Morgan Stanley cut the target price for Samsung SDI shares by 20,000 won ($18), down to 550,000 won ($496). The firm argued that EV (electric vehicle) battery manufacturers are failing to generate profits as they continue focusing on expansion and market share. On the other hand, local experts have questioned Morgan Stanely’s downgrade, claiming that Samsung SDI is doing the complete opposite.

Samsung SDI appears to be following its own rule book rather than taking the same steps as most of its rivals. The world’s largest EV battery manufacturers including LG Energy Solution and SK Innovation are now focused on building new battery manufacturing plants in the USA, but Samsung SDI isn’t showing any signs of wanting to establish a battery factory stateside.

However, this attitude shouldn’t be attributed to Samsung SDI not having the necessary resources to compete. Rather, local experts claim that Samsung SDI lacks motivation to build a new battery factory on US soil given that the country’s biggest clients — General Motors and Ford — have already formed collaborations and joint ventures with LG and SKI.

Instead of cutting prices to find new customers, market watchers claim that Samsung SDI is consolidating partnerships with loyal clients such as BMW. Eugene Investment & Securities analyst, Han Byung-hwa, claims that ‘this strategy reflect Samsung Group’s overall style of avoiding a game of chicken.‘ Therefore, Samsung SDI is putting profitability first and expansion later, which is why some market watchers are questioning Morgan Stanley’s downgrade on Samsung SDI shares.

Samsung SDI could become more focused on research & development

According to analyst Park Se-hyuk cited by The Korea Herald, one of the reasons why Samsung SDI isn’t going all-in on expansion is because of Samsung Group’s general strategy that involves Samsung SDI ‘getting the fair price.’

Furthermore, Samsung SDI is manufacturing cylindrical and prismatic battery cells, but the company plans to mass-produce solid-state batteries starting 2027. Therefore, market watchers believe that Samsung SDI will continue to meet the high demand of cylindrical and prismatic batteries, all the while avoiding expansions and, instead, investing in R&D to develop the next-generation EV batteries.

In short, Samsung SDI sees no reason to expand massively in the USA where it doesn’t have enough clients. Instead, the company continues meeting the demand for current battery technologies all the while preparing for the future.

It’s also worth noting that Samsung SDI is making massive investments in its battery manufacturing facilities, except not in the USA. Samsung is expected to invest nearly $1 billion in its EV battery plant in Hungary before the end of the year.