Samsung buys stakes in BYD; looks to take advantage of the growing electric vehicle sales in Chinese market
Reports emerged of a potential stake buying by Samsung in China’s biggest EV manufacturer a few days ago. Standing in confirmation with the report, the South Korean multinational conglomerate signed a deal which resulted in a purchase of US $449 million in BYD. According to internet sources, the move would help Samsung to venture into the Chinese electric vehicle space.
The deal was penned down through Shanghai Samsung Semiconductor which will open doors to kick-start EV operations in the vast Chinese marketplace. The Samsung Semiconductor firm is an important subsidiary to the brand as far as the automotive business goes and it was not included in a recent list approved by China for foreign battery manufacturers.
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Therefore, to not lose market share, Samsung had to pursue with buying stakes in BYD which would substantiate its business in the semiconductor industry as well for automobiles. BYD said in an official statement that the obtained funds will be utilised for production expansion besides the research and development of batteries and other EV related technologies.
Samsung’s buying of stakes in China’s largest EV manufacturer is understandable considering the significance and the untapped potential in a market which has grown tremendously in recent years. Moreover, China overtook United States to become the market leader in electric vehicles last year. In one of the biggest automotive pushes, Chinese government wants the sales of EVs to go beyond three million units per annum halfway through next decade.
The country’s automotive governing body CAAM (China Association of Automobile Manufacturers) said, the industry has responded to the target framed by the administration as the retailing figures of electric vehicles have increased twice compared to corresponding period last year with a total of around 170,000 units in the opening half of 2016.
The move by Samsung has more influences than what meets the eye as reportedly the electronics giant is looking to offset for the de-growth in television and smartphone sales across the globe. This could trigger more electronics producers to enter into the burgeoning EV space as the presence of electronics and gadgets in the zero-emission vehicle development is pivotal.