BMW AG plans to buy electric-vehicle batteries from six new factories to be set up and run by companies including Contemporary Amperex Technology Co. Ltd. and Eve Energy Co. as the world’s biggest luxury-car maker attempts to overhaul its supply chain.
Two plants each in Europe, China and North America will produce round lithium-ion cells that enable longer ranges and faster charging than the prismatic cells BMW currently uses, the company said Friday. At roughly half the cost, the technology is meant to bolster BMW’s planned “Neue Klasse” EV platform and follows Tesla Inc., which has been using a cylindrical shape for some time.
“We are approaching an enormous technology leap,” Frank Weber, BMW’s development chief, told reporters. He added that BMW’s suppliers have agreed to produce the cells with renewable energy only and partly use recycled cobalt, nickel and lithium to cut production-related carbon emissions by as much as 60%.
The decision is part of a BMW strategy — which differs from pushes by Tesla and Volkswagen AG — to buy cells rather than get involved in their production. With Neue Klasse, due to start in 2025, BMW aims to pick up speed in an increasingly competitive EV market.
Batteries are among the major cost drivers of an electric car, and improving technology has typically delivered annual efficiency gains. That trajectory has come under strain due to the surging cost of raw materials, challenging automaker forecasts of soon selling EVs for a similar margin to combustion-engine autos.
BMW will partner with CATL and Eve Energy to source the round cells in Europe and China, with the search for partners in North America still ongoing. The two American factories will be erected in a free-trade zone in the US, Canada or Mexico, BMW said. Each facility will have an annual production capacity of as much as 20 gigawatt-hours.
BMW said it has already awarded purchasing contracts worth a double-digit-billion-euro amount to CATL and Eve Energy. Part of the batteries are coming from CATL’s planned 7.3 billion euro ($7.3 billion) facility in Hungary that’s also due to supply Mercedes-Benz AG. Eve Energy will build and operate a second plant to make round cells in Europe.
Weber said Neue Klasse’s entry-level models may also use lithium iron-phosphate batteries, which are cheaper and don’t require nickel or cobalt, but offer less energy density and are heavier than the new round cells. The line’s top EVs will have a range of as much as 800 kilometers (497 miles) and charge from 10% to 80% in less than 30 minutes, he said.
