BMW: Billion dollar battery contract

The German automaker, BMW, has recently entered into a contract with the Chinese company Contemporary Amperex Technology Ltd (CATL). The contract is valued at $1.16bn and sets down the way in which the Chinese battery maker will delivery battery packs for BMW's upcoming EVs. 

According to a report by Reuters, the battery maker will be allowed to build a plant to produce the batteries in Germany. This will allow BMW to decrease the logistical costs associated with producing the batteries far from the car manufacturing plant. Additionally, in a world that is currently plagued by political instability (i.e. recent tariff wars between US, Europe, Mexico, and China), the option of having a battery plant in Germany can only be described as a positive measure for the Bavarian company.

As Reuters reported, BMW is scouting for land located about 250 miles north of BMW's Munich headquarters and which is approximately equidistant from its Dingolfing plant. The Dingolfing plant is currently responsible for the production of components for BMW’s electric vehicles, as well as the manufacturing of the 3, 4, 5, 6 and 7 Series, as well as car bodies for Rolls-Royce Motor Cars. The new BMW 8-series is also expected to be produced in Dingolfing. 

BMW is currently supplying its batteries from Samsung SDI. As the Drive astutely notes, though, the battery maker will make use of the Chinese government's subsidies, aimed at increasing the Chinese battery makers' dominance outside of China. Additionally, both the Chinese and German government have taken measures to boost sales of EVs, in a bid to slowly phase out internal combustion engines, so the partnership between the two companies seems like a good political fit too. 

Andrew Kyprianides