BMW agrees $4.7 bln contract with China's CATL for battery cells

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BMW is investing billions into China’s new battery-cell factory in Germany

BMW plans to source €4 billion (Dh17.28bn) worth of battery cells from Chinese battery maker Contemporary Amperex Technology Ltd (CATL) over the next few years, the auto maker's purchasing head said on Monday.

BMW said it had struck a deal with CATL to buy batteries worth 4.0 billion euros ($4.7 billion) - with 1.5 billion euros of sales in Germany and 2.5 billion in China.

Europe's chip makers were not wiped out completely, however, maintaining - with the help of state aid - a lead in high-performance chips used in industrial and power-management applications such as electric cars, trains, wind turbines or computer server farms.

The company plans to make the investment in two stages, with an initial 14 gigawatt-hours of capacity to come on stream in 2021.

Reports also claim that a deal was made between Volkswagen and CATL for the purchase of electric batteries for its vehicles, although the details about the deal are still unknown to the public. BMW's purchasing head Markus Duesmann said he does not rule out his company producing battery cells itself in the future.

The company sold 560,000 BMW brand vehicles to customers in China in 2017, more than the USA and Germany combined. "I don't rule it out", he said. Bosch a German vehicle-parts supplier seems to be a viable instance, as the firm recently decided not to manufacture battery-cells due to the increase in competition. "We welcome the decision of CATL to manufacture in Germany and are in talks regarding this", a spokesman said.

The politics of electric vehicle batteries are complicated, with the majority of battery producers being based in Asia.

BMW is sourcing raw materials for the cells itself to pass to the battery makers, in particular cobalt, and is now negotiating long-term contracts.

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

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