The following is excerpted from the question-and-answer section of the transcript.
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Question: Jay Kwon - JPMorgan Chase & Co, Research Division - Analyst
: (Interpreted) I have also 2 questions about the EV battery business. First is, can you give us an update on the supply and production of the Gen. 5?
And also, can you give us some direction as to the chemistry you're working on for the post Gen. 5 batteries?
Second question is about the cylindrical batteries for EV applications. We noticed that the growth of cylindrical batteries for EVs are increasing
quite rapidly. What is SDI's outlook for cylindrical EV batteries? And can you share with us the contribution of EV batteries within your overall
cylindrical battery? And how much do you think that that will grow in the future?
Unidentified Company Representative
(Interpreted) First to answer your question about our Gen. 5 production update and future plans for the batteries. We started, as we mentioned,
mass production of the Gen. 5 battery in the new Hungary line from third quarter. The Gen. 5 is currently being supplied to the new BMW model.
And next year, a significant revenue increase is expected from the Gen. 5, as we plan to supply to other customers from next year.
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NOVEMBER 02, 2021 / 4:30AM, 006400.KS - Q3 2021 Samsung SDI Co Ltd Earnings Call
Looking towards the entire EV market, the EV market itself is trying to focus on satisfying the diverse needs from customers for EVs on different
levels of performance and price. And so we expect the EV battery market is also going to become more segmented and develop beyond the current
focus on the premium market and see growth of other segments such as volume markets.
In the premium market, demand for battery performance, such as high energy density and rapid charging, will grow in order to design vehicles
with larger interior space and higher performance. While in the volume market, greater weight would probably be placed on cost competitiveness.
As the market becomes more segmented, we're also developing different battery technologies that address each market's needs.
First, in the case of premium markets, we will focus on delivering maximum energy density by using high nickel cathode material and silicon anode
material and enhance our rapid charging performance by adopting new processes in the pole-plate process.
Also in order to improve the cost competitiveness for the volume market, we plan to adopt cobalt-free cathode material that replaces cobalt with
manganese to reduce material cost and also adopt a dry type pole-plate technology, which would give us additional cost savings in the manufacturing
process.
Unidentified Company Representative
(Interpreted) Your second question was the cylindrical battery for EVs, the market outlook as well as an update on the share of EV batteries within
our entire cylindrical battery business.
Cylindrical batteries have various advantages such as standardized sizes. Also, therefore, it has relatively lower prices versus other form factors.
And because of the small cell size, they're good for implementing various battery pack designs, including stacking.
Due to these advantages, we're seeing an increasing demand for cylindricals from not only the usual start-ups, but also conventional OEMs. Our
outlook is that the EV cylindrical battery market will grow from around 75 gigawatt hours this year to around 170 to 180 gigawatt hours in 2026,
which will be around 2% CAGR growth rate.
Our EV cylindrical battery sales is also -- has also increased significantly year-over-year, especially around the 21700 size, which now takes up -- and
our cylindrical batteries for EVs currently takes up around 10% of our total cylindrical batteries. And next year, we expect the share to increase to
above 20% with increased supply to existing customer projects and also the addition of new projects.
We're currently also developing a variety of different cylindrical sizes other than the 21700 to capture the rapidly growing EV cylindrical battery
market.
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