BMW agrees to $4.7 billion contract with China's CATL for battery cells

Lloyd Doyle
July 11, 2018

Ltd. (CATL), a leading manufacturer of batteries for new-energy vehicles, signed a deal to open its first overseas factory in Germany, while German carmaker BMW increased its investment in China and its purchases from CATL.

Incidentally, BMW declared that it would purchase battery cells worth Euro 4 billion (USD 4.7 billion) from CATL's already existing factory in China.

"If we want to have a German battery cell industry, then this is a warning shot", said auto industry expert Joern Neuhausen of PwC consulting arm Strategy&.

Europe's chip makers were not wiped out completely, however, maintaining - with the help of state aid - a lead in high-performance chips used in industrial and power-management applications such as electric cars, trains, wind turbines or computer server farms.

Duesmann said BMW was investing in cell research but a decision on whether to produce battery cells itself had not been made. It declined to say how much the boost will cost. Set to be put into operation in 2021 and provide 600 jobs for the local area, its capacity is expected to reach 14Gwh in 2020. This is in contrast to the 12 GWh that the company achieved shipments of in 2017. "I don't rule it out", he said.

Politicians and stakeholders, among them trade unions and government advisors, have pushed for battery cell production in Germany for years, but the country's carmakers have so far shied away from investing in such plants, which would make them less reliant on foreign suppliers, arguing that domestic production would be more expensive than Asian imports.

It remains to be seen if the agreement will come to fruition due to uncertainty surrounding cell production, delivery times and the development of BMW's NEV models.

BMW is sourcing raw materials for the cells itself to pass to the battery makers, in particular cobalt, and is now negotiating long-term contracts. It said it was not sourcing cobalt from mines in Congo.

Other reports by Iphone Fresh

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