Manufacturing News

BMW signs $4.7 billion contract with CATL for battery cells

BMW plans to source 4 billion euros' ($4.7 billion) worth of battery cells from Chinese battery maker Contemporary Amperex Technology Ltd. over the next few years.

The long-term contract sees 1.5 billion euros' worth of battery cells coming from a new CATL plant in Erfurt, in the eastern German state of Thuringia, Markus Duesmann, BMW’s head of purchasing, said in Munich. The rest will come from China.

A contract for the construction of the new plant is due to be signed on Monday during a visit to Germany by China's Premier Li Keqiang.

There have been warnings that Europe's lack of production capabilities for the cells that power electric vehicles could leave its car industry exposed and too reliant on others.

Tesla founder Elon Musk has explored building a battery 'Gigafactory' near the Franco-German border, in the vicinity of its Grohmann Engineering division.

Duesmann said BMW will invest in the CATL factory in Erfurt, but declined to say how much.

He said BMW was investing in battery cell research but a decision on whether to produce battery cells had not been made.

"I don't rule it out," he said.

BMW is "very comfortable" with its two battery cell suppliers, but could add a third and is in talks with eight manufacturers, Duesmann added.

He said he would welcome other carmakers who also wanted to invest in the Erfurt plant.

However, BMW has no plans to jointly purchase battery cells with rival Daimler, he said, because of the competitive advantage that can be gained if batteries provide greater range or can be charged faster.

Daimler said its strategy was to buy components where they are produced. "We welcome the decision of CATL to manufacture in Germany and are in talks regarding this," a Daimler spokesman said.

BMW is sourcing raw material, notably cobalt, for the battery cells independently to pass along to the battery makers and is currently negotiating long-term contracts.

Duesmann said BMW would only secure contracts where inhuman conditions and child labor were ruled out. It said it was not sourcing cobalt from mines in Congo.

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