EcoPro BM Co. has signed a 44 trillion won ($34 billion) to supply cathodes to Samsung SDI Co. for five years, deepening their alliance with their bet on the long-term growth of the electric vehicle market, contrary to ongoing concerns about the EV slump.
South Korea’s leading battery materials producer inked a contract with the Korean major battery maker on Friday to supply lithium nickel-cobalt-aluminum oxide (NCA) cathodes, used in manufacturing EV batteries, from the beginning of 2024 to the end of 2028, EcoPro BM announced in a regulatory filing on the same day.
The long-term order is worth nearly 44 trillion won, according to the company.
The first batch of cathodes to be supplied to Samsung SDI next year will be manufactured from EcoPro BM’s plant in Pohang, about 260 kilometers southeast of Seoul, Korea’s capital.
Starting in 2025, it will produce cathodes at its new plant in Hungary, due to embark on commercial production in the same year, to supply them to the battery maker’s EV plant in the European country.
It has teamed up with its sibling firms EcoPro Innovation Co. and EcoPro AP Co. to build the plant on a 430,000 square-meter site in the city of Debrecen, 230 km east of Budapest, for 382.7 billion won. They broke ground on the plant in April.
The major battery materials contract comes despite lingering concerns about fizzling global demand for electric vehicles, underscoring their confidence in the long-term growth of the green car market.
ROSY OUTLOOK FOR THE EV MARKET IN THE LONG TERM
After peaking in 2022, global EV sales have slowed down through this year, even with new model launches, price cuts and generous tax credits, leading automakers and battery producers to delay their EV push with the suspension of EV and battery output ramp-ups.
EcoPro BM and Samsung SDI’s bold move against the current EV trend is seen as a preemptive move to prepare for a recovery in battery-powered car demand in the longer term, market analysts said.
With the order, the two companies’ ties are further tightened, which is also expected to pave the way for the long-term growth of EcoPro group.
The battery materials-producing company first started supplying cathodes to Samsung SDI in 2011, laying the groundwork for its growth.
EcoPro BM and Samsung SDI in 2020 set up a joint venture EcoPro EM Co., which supplies NCA cathodes to the battery maker’s offshore battery plants.
The battery materials maker has supplied about 200,000 tons of cathodes in total to its battery-making partner.
Samsung SDI supplies EV batteries to major finished carmakers including BMW, General Motors, Hyundai Motor Co. and others.
It controls the smallest market share among Korea’s top three battery providers, including LG Energy Solution Ltd. and SK On Co.
EcoPro BM shares rose 2.2% to end at 280,000 won apiece on Friday, outperforming the broad Kospi market that lost 1.2%.
