Samsung SDI Warns U.S. Tariffs Could Raise EV Battery Costs

Samsung SDI has flagged rising costs for EV battery production in the U.S. due to import-dependent materials facing new tariffs. The South Korean battery giant warns of potential price hikes and lower EV demand as the industry grapples with shifting trade policies.

Samsung SDI, one of the world’s top suppliers of electric vehicle (EV) batteries, has issued a cautionary signal about the potential impact of U.S. tariffs on its production costs. Although South Korea assembles its EV batteries within the United States, many of the crucial materials and components it uses are imported from abroad. These imports, now facing tariff hikes, are expected to raise the cost of battery production, costs that could eventually spill over to automakers and, ultimately, consumers.

The issue was brought to light during Samsung SDI’s first-quarter earnings call on Friday, during which Executive Vice President Kim Yoon-tae outlined how the company is navigating these new trade headwinds. According to Kim, while battery assembly in the U.S. shields the company from direct tariffs on the finished product, battery manufacturing depends on a wide array of parts sourced from international suppliers. These imported inputs are precisely where the pressure is building.

“While the production of EV batteries takes place in the United States, there is no direct tariff impact. However, many materials and components are imported from outside the U.S., which is expected to increase cost burdens,” Kim said during the call. His remarks underscore a reality that extends well beyond Samsung SDI: the global EV supply chain remains deeply interconnected, even as governments push for more localized production to strengthen domestic industries.

The implications of rising production costs are not confined to the company’s balance sheet. Samsung SDI’s batteries power electric vehicles for major global automakers such as BMW, Rivian, General Motors, and Stellantis—all of whom could feel the downstream effects. Vehicles produced by these manufacturers in neighboring Mexico and Canada may also face tariff-related hurdles when crossing into the U.S. market. Kim cautioned that this could result in higher prices for EVs, which in turn risks dampening consumer demand at a time when the push for green transportation is accelerating worldwide.

Despite the warning, Kim did not specify whether Samsung SDI would shoulder the additional costs or pass them along to its customers. However, he did acknowledge that the tariffs will place a strain on the company’s performance and added that Samsung SDI is committed to closely monitoring developments in trade policy. The company also plans to work alongside its customers to find ways to mitigate the financial impact.

The challenge facing Samsung SDI highlights a larger issue within the global EV ecosystem. Even as companies rush to build battery production plants across the United States to capitalize on government incentives and meet local sourcing requirements, the raw materials essential for lithium-ion batteries, such as lithium, cobalt, nickel, and graphite, are largely mined and processed overseas. The result is a supply chain that remains vulnerable to geopolitical tensions, trade disputes, and fluctuating regulatory environments.

Samsung SDI operates battery production facilities in the United States, South Korea, Hungary, and China, offering it some geographic flexibility. Still, no amount of diversification can fully insulate the company from global trade dynamics, especially when key resources continue to flow from outside the borders of its manufacturing hubs.

The timing of this warning is critical. Governments in the U.S. and elsewhere are investing heavily in incentives to boost EV adoption and domestic battery manufacturing. But these same policies, designed to spur local growth, may inadvertently raise costs if companies are unable to fully source components domestically. Samsung SDI’s alert suggests that the balance between building local capacity and maintaining cost efficiency is far from settled.

For now, both automakers and consumers are left to wonder how these shifting tariff policies will reshape the EV market. Whether companies like Samsung SDI absorb the rising costs or transfer them through the supply chain remains to be seen. One thing is clear: the road to electrification may be getting more expensive.