BMW agrees €2bn battery cell contract with Northvolt
Order with Swedish manufacturer comes amid race to secure electric vehicle parts
BMW has signed a €2bn contract with the Swedish battery cell manufacturer Northvolt, to secure supplies for its upcoming electric models as competition for core components heats up.
The premium carmaker, which has already spent €10bn on battery cell contracts with China’s CATL and Korea’s Samsung SDI, said the order would be fulfilled from 2024 when Northvolt’s Skelleftea plant is scheduled to have expanded its capacity.
BMW added that it would work with Northvolt to source the raw materials for cell production, including cobalt and lithium, “from mines that fulfil the high sustainability standards of both companies”.
Last week the Munich-based group signed a contract worth €100m with Moroccan mining company Managem Group to meet about a fifth of its cobalt requirements for its next generation of electric cars. It will source the rest of its cobalt, and much of its lithium supply, from Australia.
BMW’s move comes a few weeks after rival Daimler announced that it would invest “a multimillion-euro amount” to take a 3 per cent stake in the Chinese battery cell maker Farasis.
In May, Volkswagen became the first large carmaker to buy directly into a domestic Chinese battery maker, signing a €1.1bn deal to take a 26 per cent stake in the Shenzhen-listed manufacturer Gotion High-Tech and become the company’s largest shareholder. VW already has an agreement with Northvolt, with which it is building a battery cell factory in the German city of Salzgitter.
The country’s top three carmakers have been scrambling to secure supply of batteries as they ramp up their electric car production in the wake of strict EU carbon emissions regulations. VW alone is planning to produce about 70 new electric models over the next ten years, while BMW has pledged to have 25 plug-in hybrid or pure electric cars on the market by 2023.
However, European carmakers are heavily reliant on Asian companies for battery cells, which are the most expensive part of an electric car.
The German government has pledged to support homegrown cell manufacturers, and last month awarded its first grant — worth €300m — to battery company Varta. Chemicals groups BASF and Umicore, PSA brand Opel and BMW are also set to receive state subsidies.