Samsung, the South Korean multinational conglomerate, is the latest company showing a positive interest in the growing electric car market. To strengthen its foothold in the electric automobile segment (while continuing development of batteries for electric vehicles), Samsung is reportedly in talks to acquire a stake in BYD Co. For the uninitiated, BYD Co Ltd is a Shenzhen Chinese car manufacturer, specializing in the manufacturing of electric vehicles and batteries. Founded in 1995, BYD stands for Build Your Dreams, is backed by Warren Buffet’s Berkshire Hathaway Inc. and is a major player in China’s electric car and battery markets. China is currently the largest market for electric vehicles, surpassing the United States in 2015, and the automobile market in China is a magnet for technology companies looking to invest and step into the newly emerging sector.
This move by Samsung follows a global trend of the main technology companies expressing an increasing interest in the next-generation automobile industry, mainly electric and self-driving cars. Rivals like Apple and Google are already developing their infrastructure to capitalize the shifting automobile market. According to Samsung, this deal will be crucial to developing and improving their car chip business. Samsung has denied the deal has any relationship to Samsung SDI, its separate lithium-ion battery manufacturing entity in which Samsung holds a 20% stake, but in the wake of the BYD Co. and Samsung news, shares in SDI rose by 8% in speculation that SDI might supply batteries to BYD Co.
Samsung has declined to disclose the details of the deal until finalization, but according to the Korea Economic Daily, Samsung is buying shares worth $449 million (3 billion yuan). This amounts to a 4% stake in BYD, although this is yet to be confirmed. In spite of the Chinese automobile giant confirming the participation of Samsung in a private exchange of stock. Samsung has also confirmed that it has no intentions of participating in the management of BYD Co going forward, although the acquisition is expected to help Samsung recover from the setback it experienced in June 2016 when it was denied certification for car batteries, as it failed to meet certain requirements.