According to two people with knowledge of the situation, BMW (BMWG.DE) will purchase huge cylindrical batteries from China’s EVE Energy Co Ltd (300014.SZ) for its electric vehicles in Europe, following Tesla Inc (TSLA.O) in doing so.
The development of this revolutionary cylindrical battery cell has the promise to revolutionise the market for electric vehicles.
As they finalise the deal for the next-generation energy technology, it is equally crucial to advance the economic viability and design of their current battery technology.
Another person with direct knowledge of the arrangement revealed that EVE has inked contracts to serve as BMW’s major supplier of battery cells across Europe for its new line of electric vehicles, which are scheduled to go on sale in 2025.
This year, Tesla began producing its new, larger-format 4680 cylindrical battery, which has a diameter of 46 millimetres and a length of 80 millimetres.
It has stated that it anticipates the battery will have a better range and reduced production costs when compared to the 2170 cylindrical battery, which is currently in use.
The sources, who declined to be named because they were not permitted to speak to the media, claimed that the batteries produced by Guangdong-based EVE will be comparable in size.
Corporate papers say that EVE also intends to build a sizable cylindrical battery factory in central China.
EVE, a provider to BMW in China, declined to comment when contacted by Reuters. In early September, BMW claimed it will announce some battery-related information, but it chose not to elaborate.
BMW’s decision to switch from prismatic batteries, which it now uses, underlines the growing support for larger-format and lost-lasting cylindrical batteries.
In the past two years, prismatic batteries, which are shaped rectangular and can be more cost-effectively packed, have replaced other types of auto batteries as the most popular option.
However, advocates of cylindrical batteries contend that advances in energy density have made the newer, bigger size cells more cost-effective.
The largest battery manufacturer in the world, CATL (300750.SZ), based in China, is also scheduled to begin supplying BMW with cylindrical batteries in 2025.
The likelihood that these batteries will likewise have large-sized cells is very high. Requests for feedback on the anticipated dimensions received no response from CATL.
The quantity of the batteries BMW planned to purchase from EVE and CATL was not immediately apparent.
According to the individual with first-hand knowledge of the agreement, EVE’s agreement with BMW led the Chinese business to declare in March that it will establish its first unit in Europe, a cylindrical battery manufacturing facility, in Debrecen, Hungary.
In the same location, BMW is also building a facility where it intends to create electric vehicles built on its Neue Klasse base.
Government subsidies are fueling EV demand in Europe and the US, prompting Chinese battery & EV manufacturers to expedite plans to establish production facilities abroad.
In order to serve European manufacturers, CATL revealed this week that it would construct the largest battery plant in Europe, with a 100 gigawatt-hour annual capacity, also in Debrecen. Its principal customer will be Mercedes-Benz.
Chinese battery manufacturers, which have relied on a sizable local market where prismatic cells rule, may have to switch gears like EVE and CATL, according to Duan Bing, an analyst at Nomura. A substantial portion of the demand for new batteries is anticipated to be for giant cylindrical cells.
Eve is a significantly smaller company than CATL. It was established in 2001 by Liu Jincheng, a lithium-ion battery researcher who is also a supplier to Xpeng Inc (9868.HK). According to statistics from China Automotive Battery Innovation Alliance, it holds 2.3% of the Chinese market and is ranked ninth overall.
Comparatively, China’s CATL produces 47.6% of the nation’s EV batteries.