Samsung SDI and Stellantis to build battery factory in Indiana

Samsung SDI and Stellantis are together investing over $2.5 billion to build an electric vehicle (EV) battery plant in Kokomo, Indiana, the two companies confirmed Wednesday.

Choi Yoon-ho, left, CEO of Samsung SDI, and Mark Stewart, Stellantis chief operating officer for the North American region, shake hands after signing an agreement to invest $2.5 billion in building an EV battery factory in Kokomo, Indiana. [SAMSUNG SDI]

Samsung SDI and Stellantis are together investing over $2.5 billion to build an electric vehicle (EV) battery plant in Kokomo, Indiana, the two companies confirmed Wednesday.

The factory will be the Korean battery maker's first battery-making facility in the United States. Samsung SDI has a battery pack assembly facility in Detroit.

The two companies signed an agreement establishing a joint venture Tuesday in Kokomo, with Samsung SDI CEO Choi Yoon-ho and Mark Stewart, Stellantis Chief Operating Officer for the North American region, in attendance.

Samsung SDI is investing $1.3 billion for a 51 percent stake in the joint venture, with Stellantis owning the remainder.

A Samsung SDI employee will head the venture, while an employee from Stellantis will serve as the chief financial officer.

Groundbreaking is scheduled for the end of the year, with the goal of starting operations in the first quarter of 2025.

The annual capacity will stand at 23 gigawatt-hours (GWh), but could be increased to as much as 33 GWh in the future, according to Samsung SDI.

The amount of investment could also increase to as much as $3.1 billion, the two companies said.

In the plant, battery cells and modules — battery cells in frames — will be made. The batteries will be supplied to a range of EVs manufactured at Stellantis assembly plants in North America.

The new factory will likely create 1,400 new jobs.

The announcement came seven months after the two signed an agreement to form a joint venture to build a battery factory in North America last year.

“We have secured a solid foothold in the rapidly growing North American EV market through the joint venture with Stellantis," Choi said. "We will make sincere efforts to bring satisfaction to the market with top-class, quality products in the future."

Netherlands-based Stellantis was formed last year in a merger between Fiat Chrysler Automobiles and the PSA Group, and has 14 brands, including Chrysler, Jeep, Maserati, Peugeot and Citroen.

Last year, Stellantis announced its commitments to go electric, with a target of selling 5 million EVs through 2030. Stellantis wants all of its European sales to be pure electric vehicles by 2030 and 50 percent in North America.

The Indiana factory will help Stellantis achieve its goal as the carmaker currently runs its own plant in the city.

Trade rules in North America are encouraging joint production between battery suppliers and automakers.

A free trade agreement between Canada, Mexico and the United States, the United States-Mexico-Canada Agreement, requires automobiles sold in the bloc to have 75 percent of their components manufactured in North America to qualify for zero tariffs.

In late March, Stellantis and LG Energy Solution announced that they will together invest $4.1 billion to build a battery factory in Ontario, Canada.

Construction of the factory will start by the latter half of the year, and production will begin by early 2024.

General Motors and LG Energy Solution are building three battery plants in the United States, in Ohio, Tennessee and Michigan.

Ford is working with SK On, a wholly-owned battery subsidiary of SK Innovation, to build a battery factory in Turkey.

BY SARAH CHEA [chea.sarah@joongang.co.kr]