BMW establishes long-term supply contract with Northvolt

The BMW Group is driving the expansion of electromobility and has signed a long-term supply contract worth €2 billion ($2.28 billion) for battery cells with the Swedish company Northvolt.

The battery cells will be produced in Europe at the Northvolt gigafactory currently under construction in Skellefteå in northern Sweden (series plant Northvolt Ett) from 2024.

Northvolt will obtain 100% of the energy needed to produce the battery cells regionally in northern Sweden and exclusively from wind and hydroelectric power. Oliver Zipse, Chairman of the Board of Management of BMW AG, said: “To make an effective contribution to climate protection, we aim to improve our products' overall environmental balance - from resources to recycling. This applies in particular to energy-intensive production of high-voltage batteries for electric vehicles. That is why we now have a contractual agreement with our cell manufacturers that they will only use green power to produce our fifth-generation battery cells.”

Andreas Wendt, member of the Board of Management of BMW AG responsible for Purchasing and Supplier Network, added: “Northvolt is the third battery cell supplier we have partnered with, alongside our existing partners, CATL and Samsung SDI. Signing this contract is another step towards meeting our growing need for battery cells in the long term. We are systematically driving electrification of our vehicle fleet. By 2023, we aim to have 25 electrified models on the roads - more than half of them fully-electric.”

The BMW Group will also source cells manufactured in Europe from the Chinese manufacturer CATL - from the plant currently under construction in Erfurt, Germany. Every cell generation at the BMW Group is awarded in global competition to the leading manufacturer from both a technology and a business perspective. Wendt added: “This ensures we always have access to the best possible cell technology.”

The BMW Group and Northvolt will commonly source the cobalt and lithium needed as key raw materials for cell production from mines that fulfil the high sustainability standards of both companies. This ensures full transparency of the origin of raw materials at any time. Compliance with environmental standards, respect for human rights and reducing the carbon footprint are top priority. “Sustainability is an important aspect of our corporate strategy and plays a key role in expanding electromobility,” emphasised Wendt. The BMW Group will also no longer use rare earths in its fifth-generation electric drive trains from 2021 on.

The BMW Group and Northvolt are pursuing their goal of a sustainable value chain for battery cells in Europe through a joint technology consortium. Recyclable cell design is a consistent focus throughout the development of battery cells. Faced with rapidly growing demand for battery cells, recycling of battery components at the end of their lifecycle and extensive reuse of raw materials will be key to closing the materials loop in the best way possible.

As e-mobility gains more and more traction, the focus of CO₂ reduction shifts to upstream added value - and, especially, the energy-intensive production of high-voltage batteries, because up to 40% of a fully-electric vehicle's emissions come from battery cell production alone. This is a major and very effective lever for reducing CO₂ - so that is precisely where the BMW Group is focusing its efforts. As a leader in sustainability, the company has therefore reached a contractual agreement with CATL, Samsung SDI and Northvolt that they will only use green power to produce fifth-generation battery cells for the BMW Group.

“As volumes increase, the use of green power will save around ten million tonnes of CO₂ over the next decade. For comparison, that is roughly the amount of CO₂ a city of over a million inhabitants, like Munich, emits per year,” according to Zipse.

The BMW Group recognised Northvolt's potential and expertise early. In mid-2018, the BMW Group entered a cooperation to develop battery cells with the company formed in 2016. This was underpinned by the BMW Group's financial participation in the firm. Both sides benefit from the partnership: The BMW Group contributes the battery expertise it has acquired over more than 15 years, while Northvolt has enabled itself for mass production with its gigafactory in northern Sweden.

The BMW Group operates its Battery Cell Competence Centre in Munich. The aim of the competence centre is to advance battery cell technology and introduce it into production processes. The production of battery cell prototypes makes it possible to analyse and fully understand cell value creation processes. The BMW Group produces batteries in-house at its plants in Dingolfing (Germany), Spartanburg (USA) and at the BBA plant in Shenyang (China). The BMW Group has also localised battery production in Thailand, where it is working with the Dräxlmaier Group.