BMW awards a global battery order totaling about 160 GWh to three Chinese battery manufacturers: SVOLT, CATL and EVE Energy.
SVOLT will provide nearly 90 GWh of batteries for BMW in Europe, while CATL and EVE Energy will share the remaining 70-GWh order in China. With an estimated cost of $100 per kWh, this order is valued at about $16 billion.
Apart From Tesla-Style Battery Cells
BMW previously has collaborated with CATL and EVE Energy on large cylindrical Tesla-style cells. However, the recent additional order of nearly 70 GWh for these two companies includes battery formats beyond the cylindrical type.
The competition between different battery technologies in the rapidly growing electric-vehicle market continues. Tesla, as an industry pioneer, consistently has favored cylindrical batteries, starting with smaller 1865-type and 2170-type and now moving to large, high-capacity 4680-type cells. This preference has influenced most EV manufacturers and battery makers to adopt cylindrical batteries as well.
While BMW initially chose prismatic batteries on its BEVs, it has increasingly shifted toward cylindrical batteries, becoming a strong advocate for their use in future vehicles. In April 2022, BMW introduced its next-generation cylindrical batteries, called Gen6 Batteries. These high-voltage batteries will be integrated into BMW’s Neue Klasse platform from 2025 onwards and will be manufactured in Hungary. In China, however, both EV manufacturers and battery makers prefer prismatic batteries. This preference is due mainly to the dominance of LFP batteries by China, which are better suited for rigid casing. Therefore, battery manufacturers such as BYD FinDreams, CATL and CALB primarily focus on prismatic batteries.
The batteries procured from SVOLT for this BMW order also will be prismatic. SVOLT’s CEO, Hongxin Yang, recently revealed the company already has been supplying BMW’s battery-electric Mini with high-energy-density prismatic cells, featuring nickel-rich cathodes and silicon-based anodes, since September.
BMW’s order of nearly 70 GWh for CATL and EVE Energy also includes batteries beyond the cylindrical type. Other OEMs such as Hyundai, General Motors, Volkswagen and Ford also are showing interest in LFP batteries and may lean towards prismatic cells. The competition between cylindrical and prismatic battery cell technologies is expected to continue.
Chinese Alliance Fueling the Deal
This month, the first China-made BEV Mini from BMW rolled off the assembly line at the Spotlight Automotive factory, a joint venture between BMW and Great Wall Motor. The new Cooper, codenamed J01 internally, draws heavily on the traditional shape and detailing of its predecessor, the R58. The BEV Mini Coopers are expected to be officially launched in 2024.
As a new luxury brand EV, the Mini electric model hasn’t received much attention, partly because the Mini is already a niche model. Furthermore, the JV was established back in 2019 but is only now starting production of its first model. The pace is noticeably slower compared to Smart, now a joint venture between Mercedes-Benz and Geely, which was established later but already has begun mass production and sales of its first model.
From this, it’s evident BMW’s approach to electrification is to proceed steadily rather than hastily. In this context, BMW’s chosen partner may not necessarily be the leading brand in the industry, but it must have advanced technology to offer.
Unlike most other OEMs, Great Wall Motor has its own battery-cell company in SVOLT. In the collaboration with BMW, the battery technology from GWM’s subsidiary stands out. If the Mini BEV becomes the first vehicle equipped with SVOLT batteries, it will be a technological highlight. The product already has passed a series of relevant tests such as EU ECE R100.03, India AIS038 Rev2, South Korea KMVSS Article 18-3 TP48, and China GB38031, according to the group CEO.
SVOLT’s expansion in Europe is slower than CATL’s, the world’s largest EV battery maker. Prior to receiving orders, SVOLT had plans to build a 12-GWh factory in Thuringia, Germany, but currently has no production capacity. However, the new BEV Cooper is constructed on a dedicated EV platform jointly developed by BMW and GWM. The JV is based in Zhangjiagang, China, where BMW and Great Wall Motor already have experience in operating a factory together.
BMW’s Battery Strategy
BMW always has aimed to standardize battery-cell design and manufacturing. In 2022, the automaker selected three battery suppliers to produce 46XX-type cylindrical batteries, with a total planned capacity of 110 GWh. This makes BMW the second automaker, after Tesla, to show such dedication to large cylindrical batteries.
However, BMW has stringent requirements for batteries that may be too complex for most battery manufacturers to meet with their current technology. Suppliers need to put in significant effort to meet BMW’s expectations. In fact, as a recognized automaker with demanding quality standards, entering BMW’s supplier network could help second-tier battery makers such as SVOLT and EVE Energy gain market traction and earn more customer trust.
For instance, in 2012, CATL became BMW’s sole battery supplier in China. The partnership with BMW not only elevated CATL’s technological capabilities through high standards and strict requirements but also paved the way for securing orders from other automakers.
For automakers, having enough suppliers that can invest in production capacity while maintaining low-profit margins for supply has been very important. Standardized production of battery cells enables better cost control than manufacturing cells in-house.
For BMW, electrification is crucial, but the company has not invested in battery cell plants. BMW is confident that battery manufacturing costs ultimately will account for less than one-third of the overall EV cost due to overcapacity. As a luxury automaker with an annual production of over 2 million vehicles, BMW can attract global battery manufacturers to supply cells, eliminating any need to establish its own cell plants. This fundamental difference in electrification investment is what sets BMW apart from German rival Volkswagen.
This content is usually only available with a Wards Intelligence subscription. To access our other insights, as well as our market-leading automotive data and analysis, inquire about a subscription today.
Already a subscriber? Log-In Now.
