BMW signs $2.3 billion battery deal with Northvolt

BMW has signed a deal with Northvolt to order €2 billion (about $2.3 billion at current exchange rates) worth of electric vehicle battery cells from the Swedish supplier. In a time when the battery industry appears to be dominated by Asian suppliers, BMW’s deal with Northvolt signals a shift in the supply chain for European automakers, with an emphasis on sustainability and battery life cycle.

Northvolt will produce BMW’s battery cells at a new gigafactory (pictured in the above rendering) being built in northern Sweden, where it plans to source 100% of its energy from renewable sources — specifically wind and hydroelectric. The company plans to begin producing cells at the new plant in 2024, concerning itself not just with the production of batteries, but also in their end-of-life recycling. Through its Revolt program, as noted by Automotive Logistics, Northvolt plans to recycle 25,000 tons of battery cells annually by 2022, with recycled material making up 50% of new batteries by 2030.

In addition to recycled materials, BMW says it and Northvolt are committed to responsible sourcing of raw materials — like cobalt and lithium — for their battery cells. BMW plans to eliminate the use of rare earth metals in its fifth-generation electric powertrains beginning next year.

It’s hard to disentangle any part of the EV industry from Tesla these days. Northvolt is headed by CEO Peter Carlsson, a former supply chain vice president at Tesla from 2011-2015, according to his LinkedIn profile. Another Tesla supply chain alumnus among the leadership team at Northvolt is COO Paolo Cerruti.

In addition to Northvolt, BMW sources battery cells from Samsung SDI and Chinese manufacturer CATL. BMW plans to source cells from CATL’s new European plant being constructed in Erfurt, Germany. BMW builds the batteries for its vehicles near where its vehicles are built, in Germany, China and here in the U.S. in Spartanburg, South Carolina.

The deal between BMW and Northvolt is part of a larger movement of building batteries and their components closer to the source. As detailed in a report from Chemical & Engineering News, more companies are building battery factories in Europe to be closer to their customer base. Many of these are from Asia or U.S., like CATL, Samsung, LG Chem and Tesla, but European companies like Northvolt and Saft hope to compete with these giants on their home turf.

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