Samsung has just struck a deal with Magna Steyr to buy its battery business. Never heard of Magna Steyr? That’s not surprising. It is one of those “behind the scenes” companies that helps the big name car companies bring their cars to market. It builds car parts for Audi, Fiat, GM and Volkswagen, providing critical mechanical and electronic components to most of the brands we are familiar with. This includes batteries.
According to reports in Business Insider, Samsung only bought the battery manufacturing business from Magna, while the rest of the manufacturing giant stays with the parent company.
Samsung is already the battery supplier for the BMW i3 and i8. Most people don’t know that it also has an agreement to supply 8% of the battery needs of Tesla and may play a role in that company’s GigaFactory project. It has also gone head to head with Apple in the smart phone business and claimed a sizable chunk of that market for itself, making it clear it’s not scared to play with the big kids.
The automobile business is changing right before our eyes. In the old days, each company made their own engines. Back in the 70’s, General Motors lost a major court battle with disgruntled Oldsmobile and Buick owners who were upset to find the engines in their brand new cars actually were built by Chevrolet. Oh, the horror! But in the bright, shiny new world of electric and plug in cars, none of the manufacturers actually makes its own batteries. All that expensive R&D is farmed out to companies like Panasonic, LG Chem, Magna Steyr, and Samsung. There’s a lot of money to made from manufacturing the batteries for future cars and the competition will be fierce.
Why did Magna Steyr decide to sell off its battery business to Samsung when battery technology is such a hot property these days? Perhaps Samsung made it an offer it couldn’t refuse. And why would Samsung do that? Well, it seems to enjoy taking on Apple, which has sued Samsung for billions in damages for patent infringement in courts around the world. Maybe its payback time. Or maybe it’s just smart business.
Whatever the reason, there is no question that battery technology is where the action is in the car business right now and will be for years to come. There are billions to be made and the big players are jockeying for position. Samsung has just made it clear it will be a force to be reckoned with going forward.