Samsung SDI, GM to build $3.5 billion battery plant in Indiana

Samsung SDI and General Motors will together invest $3.5 billion to build a battery plant in Indiana as EV sales are stalling in global markets.

Samsung SDI CEO Choi Yoon-ho, right, talks with General Motors CEO Mary Barra after the two first signed a memorandum of understanding on a joint U.S. battery plant in March last year. [SAMSUNG SDI]

Samsung SDI and General Motors will jointly invest $3.5 billion to build a battery plant in Indiana despite the global slowdown in EV sales.

However, the production capacity was reduced, and the mass production schedule was delayed from the initial plans.

Samsung SDI CEO Choi Yoon-ho, center, and Kurt Kelty, right, vice president of batteries at General Motors, pose for a photo after signing an agreement to jointly invest $3.5 billion in a battery plant in Indiana at the Korean company's headquarters in southern Seoul on Tuesday. [SAMSUNG SDI]

The two companies sealed a legally binding agreement Tuesday, finalizing details like investment size and capacity under discussion since they agreed to build a battery plant in March last year.

The plant, located in New Carlisle, Indiana, will have an initial production capacity of 27 gigawatt-hours, sufficient to manufacture 350,000 EVs. The annual capacity is ultimately expected to increase to 36 gigawatt-hours, according to Samsung SDI.

Mass production is slated to begin in 2027, a delay from the initially announced 2026.

The new plant will produce high-nickel prismatic batteries for General Motors' future EVs. The joint battery plant is expected to create approximately 1,600 new jobs.

The Indiana plant will be Samsung SDI's third battery-making plant in the United States. The company is already building two battery plants in Kokomo, Indiana, with Stellantis. The first factory is scheduled to start production in December.

The second plant is estimated to begin production in early 2027.

“Building on last year's partnership with GM, the No. 1 automaker in North America, we have established a premium battery production hub to lead the U.S. EV market,” said Samsung SDI CEO Choi Yoon-ho. “Samsung SDI will make its best efforts to help GM enhance its leadership in the EV market with the company’s battery products featuring 'Super Gap' technology.”

Samsung SDI's investment comes while other Korean battery makers have decided to suspend or delay construction of joint battery plants amid slumping EV demand.

Ultium Cells, a joint battery venture between LG Energy Solution and General Motors, said it is slowing the construction of its third plant in Michigan. LG Energy suspended the construction of its battery production line for energy storage systems in Arizona in June.

SK On also pushed back the operation of its second Kentucky plant, a joint venture with Ford Motor initially scheduled to begin production in 2026.

"Samsung SDI has no change in our investment plan," Kim Yoon-tae, vice president of the business management office at Samsung SDI, said during a recent conference call. However, it posted a weaker-than-expected operating profit of 280.2 billion won ($210 million) in the second quarter, down 38 percent on year.

Samsung SDI said it has "no change in its investment plan," though it posted a weaker-than-expected operating profit of 280.2 billion won ($210 million) in the second quarter, down 38 percent on year.

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