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BMW agrees US$4.7b contract with China’s CATL for battery cells

11 July 2018

CATL will build the battery factory in central Germany to supply the country's vehicle industry through its transformation toward electric cars, high-end manufacturer BMW said Monday.

BMW has awarded a contract worth just over 1 billion euros ($1.2 billion) for CATL to make cells for electric cars, while Volkswagen has picked CATL and South Korea's Samsung and LG Chem to deliver $25 billion worth of batteries. The expansion is the German luxury carmaker's second this week in China, part of a parade of accords announced at a Berlin summit with Chancellor Angela Merkel and Chinese Premier Li Keqiang in attendance. The state's economy minister, Wolfgang Tiefensee told the German Press Agency that the Chinese factory would help Thuringia become "one of the most important European locations for battery technology".

At the iX3 debut event in Beijing, BMW said the auto would have a 270-horsepower electric motor and a 70-kwh battery delivering a range of 250 miles. The factory will reach production capacity of 14 gigawatt hours (GWh) by 2022.

Mr Duesmann said BMW had invested in some of the costs for the factory in Germany, but declined to say how much.

The company sold 560,000 BMW brand vehicles to customers in China in 2017, more than the US and Germany combined.

BMW is "very comfortable" with two suppliers of battery cells at the moment, but could add a third and is in talks with eight manufacturers, he added.

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

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.

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

BMW agrees US$4.7b contract with China’s CATL for battery cells