China's State Council in 2012 envisioned nearly 500,000 plug-in vehicles on the road by 2015, and five million by 2020. This is amid the growing problems associated with escalating volumes of cars that populate the country's roads day after day. However, given the reality that only 27,800 EVs were on the road by the end of 2012, 80 percent of them buses, this goal begins to look like one of the Chinese government's empty promises.

The antidote to this suspicion is that Beijing is throwing real money at R&D projects focused on alternative-energy vehicles $15 billion. Numbers like this tend to get noticed in the high-tech industry.

Sure enough, Samsung SDI Co. Ltd announced Thursday, January 23 that it has signed a preliminary agreement to build an electric car battery factory in China by next year.

Implicit in the deal is the South Korean company's anticipation of an EV boom in a market backed by government subsidies.

Samsung SDI, an affiliate of Samsung Electronics Co Ltd, will form a joint venture in China by April. It's investing $600 million in the factory in Shaanxi province, and in other electric car battery-related businesses over the next five years, according to the company. Samsung SDI makes both smartphone batteries and TV displays.

Samsung SDI will break ground for the factory later this year in Xi'an, the capital of Shaanxi province, where Samsung Electronics is already building a multi-billion dollar fab for NAND flash memory chips. The NAND flash fab is expected to start operations this year.

Samsung SDI's joint venture will focus on the development and production of EV battery technologies.

The joint venture consists of Chinese parts maker Anqing Ring New Group and a company owned by the government of Shaanxi province, according to Samsung SDI.

The EV battery factory, scheduled to open next year, reportedly will be catering to Samsung SDI's customer BMW and car makers such as Volkswagen AG, who are rushing into electric cars in China, according to the Reuters' report. Samsung SDI presently supplies batteries for BMW's i3 and Chrysler's F500e electric cars.

Beyond its target of five million "new energy vehicles" on the road by 2020, the Chinese government is also establishing some specific technology and cost targets. They include: "batteries are to offer 150Wh/kg and cost $0.33/W by 2015, with an increase in density to 300Wh/kg and concomitant reduction in cost to $0.25/W by 2020," according to the SAE report.

By: DocMemory
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