New York — Car manufacturer BMW has signed a Eur2 billion long-term supply contract for battery cells with the Swedish company Northvolt.
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The company said July 16 that the battery cells would be produced at Northvolt's gigafactory in Skelleftea, northern Sweden from 2024.
The gigafactory is currently under construction and will obtain all of the energy needed to produce the battery cells regionally and exclusively from wind and hydroelectric power.
On June 30, BMW Management Board Chairman Oliver Zipse announced that the company would be ensuring that its cell makers would only use green power to manufacture its fifth generation battery cells.
Zipse reiterated July 16 that BMW was aiming to improve its products' overall environmental balance, from resources to recycling, and this applied particularly to the 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," he said.
He added that, as volumes increased, the use of green power would save around 10 million mt of CO2 over the next decade.
BMW member of the board responsible for the purchasing and supplier network, Andreas Wendt, said Northvolt was the third battery cell supplier BMW had partnered with, alongside CATL and Samsung SDI.
Its future European battery cell supply will now come from Northvolt and CATL, which is also currently constructing a plant in Erfurt, Germany.
"Signing this contract is another step towards meeting our growing need for battery cells in the long term. We are systematically driving electrification of our vehicle fleet. By 2023, we aim to have 25 electrified models on the roads -- more than half of them fully-electric," Wendt said.
BMW had already entered a cooperation with Northvolt in mid-2018 to develop battery cells with the company.
The companies have pledged to source cobalt and lithium commonly from mines that fulfil the high sustainability standards, ensuring full transparency of the origin of raw materials at any time.
"Sustainability is an important aspect of our corporate strategy and plays a key role in expanding electromobility," Wendt said.
He added that BMW and Northvolt were aiming for a sustainable value chain for battery cells in Europe through a joint technology consortium, with recyclable cell design a consistent focus throughout the development of battery cells.
"Faced with rapidly growing demand for battery cells, recycling of battery components at the end of their lifecycle and extensive reuse of raw materials will be key to closing the materials loop in the best way possible," BMW said.