Why Is Samsung SDI Increasing Their Investment in the Golf Cart industry?

Why Is Samsung SDI Increasing Their Investment in the Golf Cart industry?

Samsung began 2017 with a bold statement of intent in the golf cart battery market. The company will now supply cylindrical lithium-ion batteries to the world’s largest golf cart manufacturer. This major new contract with E-Z-GO comes only two years after signing with Korean golf cart manufacturer DY.

Lithium-ion batteries technology a disruptor in the golf cart battery market

Samsung predicts strong demand for cylindrical batteries in the existing golf cart market. These lithium-ion batteries have significant competitive advantages over lead-acid batteries. Lithium-ion batteries have superior lifespan, higher power output and lower maintenance costs. These advantages will create a market for converting existing lead-acid driven golf carts.

Samsung looks set to make a significant and long-term investment in cylindrical batteries. If successful, their strategy will make the company a major player in the golf cart battery industry.

The growing and dynamic golf cart battery market

Golf Carts For Sale has previously reported that the golf cart battery market is forecasted to grow. According to market analyst, Technavio, the industry can expect a healthy compound annual growth rate (CAGR) of 4.29 percent from 2015 to 2019. Samsung predicts strong growth in the golf cart battery market and dynamic changes in market share for lithium-ion batteries in the years ahead..

The lithium-ion battery industry is in its infancy, according to the company’s battery subsidiary, Samsung SDI. Their estimates indicate that a very modest one percent of the world’s 1.1 million golf carts used lithium-ion batteries until recently. The company expects game-changing growth in that market share. Commenting in the Korea Times early this month, the company suggested that the market share of lithium-ion batteries could reach 14 percent this year alone. A Samsung SDI official estimated that “an average of 350 to 600 cylindrical batteries are required for a golf cart. This is equal to 400 million battery cells if all the remaining golf carts adopt lithium-ion batteries.”

Competition in the golf cart battery market

If Samsung’s predictions prove accurate, the company’s investment in lithium-ion batteries looks like a winning strategy. The opportunity is likely to be equally attractive to competitors, however. The company will face competition from major players such as Axion, Crown, East Penn, Exide, EnerSys, Navitas and Trojan.

In the short run, price will remain a key factor in competition with more established lead-acid batteries. The efficiencies and savings available from lithium-ion batteries will be attractive to operators with healthy balance sheets. Those on tighter margins may opt for lead-acid batteries while they offer short-term cost advantages. As the industry matures, the decreasing cost of production will make lithium-ion technology more price-competitive with lead-acid batteries.

In the long-run, the projected growth in demand may encourage more competitors to enter the market. Existing battery manufacturers may follow Samsung’s lead. New entrants to the market are also a potential source of competition.

Samsung adds new value to lithium-ion batteries for golf carts

To compete, Samsung SDI plans to add value to the advantages offered by lithium-ion batteries. The demand for this technology is driven by its efficiency. Lithium-ion batteries have a lifespan up to twice as long as lead-acid equivalents. They require less maintenance than comparable lead-acid batteries. The corrosion risks associated with lead-acid batteries are minimal in lithium-ion batteries. However, all these advantages will be available (to varying degrees) from competitors’ lithium-ion batteries.

Samsung SDI is aiming to compete with a unique battery management system (BMS). Samsung’s BMS will monitor battery lifespan, charge levels and temperature. Users of Samsung lithium-ion batteries will receive automated performance updates based on this information. The BMS will be a standard feature on all Samsung SDI lithium-ion batteries for golf carts. This initial value-add will differentiate Samsung products in the emerging market for lithium-ion batteries in golf carts. Investing in further innovations could establish market leader status for Samsung. In the early development of the industry, these value-adds could be significant. They will make it more expensive to enter the market and more difficult for existing players to compete.

How will Samsung’s investment impact the global golf cart industry?

Samsung’s export-led expansion plans are not without risk. About half of the 34,000 golf courses around the world are located in North, Central and South America. Uncertainty around trade policy in the Unites States has the potential to raise unexpected trade barriers. However, the growing popularity of golf in developing countries, particularly China, may mitigate some of this risk. The successful expansion of Samsung’s production capacity and the likely response from competitors would be a boon to the industry. Efficient lithium-ion batteries with innovative value-adds look set to become standard.

This entry was posted in Golf Cart Batteries.