(March 14): Samsung SDI Co shares plummeted after the South Korean battery maker offered new shares at a steep discount to fund manufacturing plants in the US and Europe.

The shares fell as much as 7.2% in Seoul on Friday, heading for its lowest close in five years, after the company said it plans to raise about 2 trillion won (US$1.4 billion or RM6.2 billion) by issuing 11.8 million shares at 169,200 won each. That’s a 17% discount to the stock’s Thursday close and was received with scepticism by investors amid cooling demand for electric vehicles.

“Investors think this investment is too much and it’s a bit late,” said Rho Wooho, an analyst at Seoul-based Meritz Securities Co. And then there’s the question about the EV strategy of General Motors Ltd, a key customer of Samsung, he said.

Samsung SDI’s surprise capital raising plan comes as Donald Trump’s tariff flip-flop has fuelled market volatility, which makes it harder to price equity deals. It also comes as the outlook for the EV industry has soured by Trump’s anti-EV rhetoric and uncertainty around Europe’s subsidies.

GM is shutting down its self-driving business Cruise, citing high development costs, and also selling its stake in an EV battery plant in Lansing, Michigan, to its other partner LG Energy Solution Ltd amid slowing demand for plug-in vehicles.

Samsung SDI and LG, two of South Korea’s largest battery makers, have seen their stocks slump this year amid the uncertain outlook for the EV industry. Samsung SDI reported an operating loss last quarter, the first since 2017, citing a hit to its battery business from weak demand for plug-in vehicles.

The company has, however, kept plans for new manufacturing facilities intact.

Samsung SDI will use the proceeds on a joint facility with General Motors Co and boost production capacity for its plant in Hungary, it said in a statement. It will also invest to build assembly lines for manufacturing all-solid-state batteries in South Korea, it added.

The company will “actively pursue” development of new technologies such as lithium-iron-phosphate cells and keep its investments plans with GM and Stellantis NV, it added. Global carmakers are maintaining their strategy for mid-to-long term growth of electric vehicles, Samsung said.

Samsung is weighing the idea of another manufacturing plant in the US, signaling optimism about the market’s growth, chief executive officer Joo Sun Choi said earlier this month. In the US, Samsung has plans to build plants in collaboration with GM and Stellantis and has already completed another facility with Stellantis.

Uploaded by Magessan Varatharaja