BMW doesn’t have many electric vehicles on the market and doesn’t even manufacture its own battery cells. Yet, the German automaker is looking ahead and aims to secure a 10-year supply of cobalt and lithium for EV batteries as part of a new strategy.
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That’s what Markus Duesmann, BMW’s head of supply chain, told Germany’s Frankfurter Allgemeine Zeitung last week:
“The aim is to secure the supply all the way down to the level of the mine, for 10 years. The contracts are ready to be signed,”
The two metals are currently essential to the production of high energy density Li-ion battery cells and if no alternative is found in the next few years, the demand for those metals are expected to soar as Li-ion battery cells start to power more mass-produced electric vehicles.
Over the last 10 years, the price of lithium more than doubled and as for cobalt, it more than tripled over the last 3 years.
BMW didn’t have to dive that deep into the electric car supply chain as its all-electric vehicle effort cool down since the launch of the BMW i3 in 2013, but the German automaker is now looking to release a series of new all-electric vehicles starting with an electric Mini next year.
The company’s EV plans include 12 all-electric cars on the market by 2025.
They already make their own battery modules for the BMW i3, but the company is increasingly investing in electric powertrain components and last year, they invested $240 million in a new battery cell center.
I have been saying for a long time now that the best way to determine how serious an automaker is about electric vehicles is to look at their battery supply chain and their efforts to establish production for their EV programs.
Aside from Tesla and its Gigafactory plans, German automakers seem to be the most invested based on this metric.
After Mercedes-Benz’s recently unveiled aggressive electric vehicle production plan with 6 factories and a ‘global battery network’, now BMW is looking to secure battery supply down to the raw materials.
That’s good news.
Though I’m not sure that 10-year contracts are a good idea. Battery cells are evolving fast and manufacturers are changing the chemistry to optimize performance and reduce cost.
Lately, it has resulted in reducing the amount of cobalt in the cells due to cost and supply concerns.
I think maybe 5-year terms would be more prudent, but I still welcome the effort from BMW as an EV enthusiast.