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Samsung is planning to invest about $450 million in Chinese electric car maker BYD

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Electric cars are all the rage among modern tech companies. And when the likes of Apple, Baidu are on it, why wouldn’t Samsung be. Hence the news. The Korean consumer electronics behemoth is planning to invest in Chinese electric car manufacturer BYD. Through this deal, both firms aim to strengthen their respective verticals of electric cars, semiconductors, and smartphones.

In a statement given to Reuters, Samsung said,

The latest investment aims at strengthening electric vehicle parts and smartphone parts businesses for the two companies. We plan to discuss cooperation in various businesses going forward.

The company has not yet disclosed the amount and size of its investment. But Korea Economic Daily reports that the Korean giant is looking to invest 3 billion yuan(about $450 million) for about 2 per cent stake in the electric car company.

It plans to supply its electronic parts to electric car makers and create a new market for expansion. And that seems a sound strategy given the saturation in the smartphone market. Moreover, the company has indicated that the partnership would not be just limited to selling more chips or integrating Samsung smartphones into electric cars. It has also hinted at collaborations in other fields as well.

The latest partnership between a tech company and automobile manufacturer does not come as an absolute surprise. This is because of the recent surge in self-driving, electric, and internet connected cars all over the world. This has led towards many similar partnerships between traditional automobile makers and tech companies.

Why China?

There is another reason why Samsung particularly chose a Chinese company to invest in electric cars. China recently surpassed the US as the largest market for electric vehicles. The Chinese government is especially focusing on these new energy vehicles.

It aims to cross sale of 3 million units of these vehicles by 2025. According to the China Association of Automobile Manufacturers, China witnessed more than a double increase in new-energy vehicles with about 170,000 units during the first half of this year.

In addition to it, BYD, backed by Warren Buffett’s Berkshire Hathaway Inc., has emerged as an ideal candidate for Samsung to enter in the electric car segment. The company recently won an approval from the Chinese government to raise a staggering 15 billion yuan through an additional share sale.

It plans to use the funds for expansion of its battery production facility for new-energy vehicles and product development. And who better than Samsung to buy these shares and help the company with its expertise in semiconductors and batteries.


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