Is the dominance of the Chinese EV battery supply chain finally facing a significant, high-profile challenge from established Asian giants? The answer appears to be a resounding yes, following a landmark deal between South Korea’s Samsung SDI and KG Mobility (KGM).

This strategic collaboration—focused on developing next-generation battery packs using Samsung SDI’s advanced 46mm cylindrical cells—is more than just a routine supplier agreement; it’s a geopolitical signal wrapped in a technology upgrade. For Western investors and industry watchers tracking the global EV transition, this move signifies a critical step towards diversifying the battery ecosystem away from near-total reliance on Chinese manufacturing.

Samsung SDI and KGM Forge First Strategic Next-Gen Battery Pact

Samsung SDI recently announced a Memorandum of Understanding (MOU) with KGM (formerly SsangYong) to co-develop battery pack systems based on Samsung SDI’s high-performance 46mm cylindrical cells. This marks the first strategic partnership between the two companies specifically targeting future EV platforms.

Why the Cylindrical Cell Format Matters for the West

The core of this partnership lies in the hardware itself. Samsung SDI’s 46-series batteries are engineered for superior performance, which directly translates to better cars for consumers:

• Increased Range: Higher energy density allows for a longer driving range on a single charge.
• Faster Charging: A ‘tabless’ design shortens the electrical path, reducing internal resistance and boosting power output for quicker refueling times.
• Enhanced Safety: Utilizes high-nickel NCA cathodes and proprietary silicon carbon anodes to minimize swelling and improve thermal management.

Crucially, these advanced cells—which began mass production in March—are now slated for integration into KGM’s upcoming electric vehicles, including large SUVs.

The Geopolitical Play: Decoupling from Chinese LFP

The implications for supply chain security are profound. Previously, KGM relied heavily on Chinese suppliers, most notably BYD, for battery cells in models like the Torres EVX to maintain competitive pricing against domestic leaders like Hyundai Motor Group.

This Samsung SDI deal explicitly aims to help KGM pivot away from that heavy reliance. For KGM, whose current flagship EVs like the Musso EV often use LFP batteries (historically linked to China), this opens the door to advanced Nickel-Cobalt-Manganese (NCM) technology for higher-performance models.

This shift is a critical development for Western automakers who are wary of single-source dependency. Samsung SDI gains a crucial commercial validation platform for its 46-series outside of its major global client, BMW.

KGM’s Niche Strategy Meets Next-Gen Tech

KGM has carved out a niche by undercutting major players; however, this required using LFP technology for price competitiveness. The move to Samsung SDI’s higher-spec cylindrical cells suggests KGM is ready to invest in premium performance to expand its lineup beyond budget-focused EVs. The partnership also includes sharing global battery market information and joint R&D, solidifying a medium-to-long-term alliance.

Market Context: Samsung SDI’s Dual-Track Strategy

For Samsung SDI, this deal diversifies revenue streams at a time when the broader EV market is experiencing a slowdown and U.S. electrification initiatives have contracted. The company maintains its core business in prismatic batteries but is aggressively scaling up the cylindrical format as its ‘next-generation growth engine.’ Securing a major domestic OEM like KGM complements its existing relationship with BMW.

Western Insight: While the timeline and allocation volume for KGM remain undisclosed, this partnership signals that non-Chinese advanced battery technology is gaining ground in key Asian OEM strategies. Western buyers looking at future KGM models can anticipate a performance upgrade, while investors should monitor if this trend encourages other non-Chinese automakers to adopt the cylindrical format. (See our analysis on how U.S. incentives are reshaping Asian battery strategy for more context.)

Recommended Reading

For a deeper dive into the technological and geopolitical currents shaping the global battery landscape, we recommend:

• Future Battery Technologies: The Race for Next-Generation Energy Storage – Essential reading for understanding the technical battle between pouch, prismatic, and cylindrical formats.

The collaboration between Samsung SDI and KGM is a clear indicator: the race for battery dominance is heating up, and diversification away from China is a strategic priority for major automotive players.