BMW signs battery supply contract as UK gigafactory site announced

17 July 2020

17 July 2020

In a good day for battery manufacturing across Europe, BMW has agreed on a new supply deal with Northvolt, while UK startup Britishvolt has agreed on a site for the country’s first gigafactory.

With a potential revolution in the electric-vehicle (EV) market following the coronavirus (COVID-19) pandemic resulting in incentive schemes favouring zero-emission vehicles, together with a push for the technology to meet strict CO2-level regulations, battery manufacturing will be increasingly in the spotlight in the coming months.

Supply works

The BMW supply contract with Northvolt is worth somewhere in the region of €2 billion. The battery cells will be produced at the supplier’s gigafactory in Sweden, which is currently under construction and will commence output in 2024.

The German carmaker has highlighted that one of the key aspects in the new deal is that Northvolt will obtain 100% of the energy needed to produce its cells from wind and hydroelectric power. This will help the carmaker lower its carbon footprint in an age where many businesses are looking to become ‘net-zero’ in the coming years.

‘To make an effective contribution to climate protection, we aim to improve our products’ overall environmental balance – from resources to recycling,’ stated BMW chairman Oliver Zipse. ‘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.’

Building sales

BMW Group aims to generate one-quarter of its sales from electrified vehicles in 2021, rising to one third in 2025 and one half in 2030. It has also pledged to invest more than €30 billion in the research and development (R&D) of future-oriented technologies by the end of 2025. To meet its own emissions targets, BMW sees two-thirds of the reduction in emissions coming from the ramp-up of electromobility and one third from the introduction of conventional measures in vehicles.

To do this, the carmaker needs a steady stream of battery-cells. The deal with Northvolt represents BMW’s third supply chain for this crucial component, following deals with Samsung and CATL – with whom it is establishing a gigafactory in Germany.

Signing this contract is another step towards meeting our growing need for battery cells in the long term,’ added Andreas Wendt, member of the Board of Management of BMW AG responsible for Purchasing and Supplier Network. ‘We are systematically driving the 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 carmaker announced last year that it will now order €7.3 billion worth of batteries from CATL, and €2.9 billion from Samsung. The agreement with CATL is an increase in the original investment of €4 billion.

UK location announced

Meanwhile, battery startup Britishvolt has signed a memorandum of understanding (MOU) with the Welsh Government. Both parties will work together on plans to develop a commercially viable 30GWh battery-manufacturing plant, and supplementary 200MW solar plant, at the former RAF base at Bro Tathan, Vale of Glamorgan, in South Wales.

The company spent six months analysing data to select the site for the country’s first gigafactory, narrowing down the original 40-strong list of locations, looking at import/export accessibility, availability of labour and skilled staff, and convenient geographical proximity to customers and local industrial companies.

The plant is subject to UK Government funding through the Automotive Transformation Fund, to produce lithium-ion cylindrical and pouch cells primarily servicing the automotive market.

‘Wales has welcomed us with open arms and exceptional due diligence, and we believe the country has a vast untapped potential, commented Orral Nadjari, CEO and founder at Britishvolt. ‘Hiring local people, including those currently out of work, and developing strong relationships with nearby educational facilities, will be a priority for us to ensure a stream of skilled staff. Britishvolt will also encourage other businesses to invest in the region to create a ‘hub’ of battery electrification – building out our very own infrastructure and supply chain ecosystem, which will create thousands  more jobs.’

Britishvolt recently announced it was joining forces with AMTE to produce battery cells for both the automotive and energy markets in the UK.