BMW Scraps $2 Billion Northvolt Battery Deal Amid Supply and Timing Challenges

BMW has scrapped an agreement valued at around $2 billion with Swedish company Northvolt for the supply of electric vehicle battery cells, according to a report by Reuters on Thursday.

Reports from German outlets, such as Manager magazine, indicated that Northvolt was facing delays in fulfilling a supply agreement established in 2020, valued then at $2.3 billion. This deal required Northvolt to start production of electric vehicle batteries for BMW by 2024.

Cylindrical cells for BMW batteries

In a statement to Reuters, BMW announced that Northvolt and BMW Group have made a mutual decision to direct Northvolt's efforts towards the creation of cutting-edge battery cells. BMW also emphasized its ongoing commitment to supporting the development of a potent European producer of eco-friendly and recyclable battery cells.

BMW has existing battery supply agreements with Samsung SDI and CATL, who have manufacturing facilities in Europe. However, securing a contract with Northvolt would have provided BMW with a Europe-based supplier, a requirement that German car manufacturers have been increasingly urged to fulfill.

Conceptual model of BMW's Vision Neue Klasse X

In 2020, BMW declared that Northvolt would produce batteries in a plant being built in Skelleftea, Sweden, which would operate entirely on renewable energy sources. Concurrently, Northvolt unveiled plans for a facility in Germany in collaboration with the Volkswagen Group. Additionally, a 2022 announcement revealed a collaborative effort with Volvo to establish a battery facility anticipated to supply power cells for an electric Volvo XC60 SUV, and a Canadian facility slated for 2023.

BMW is transitioning to tubular-shaped batteries for its upcoming Neue Klasse series of electric vehicles, which will enhance both the energy capacity and the speed of charging. The vehicles will roll out of two European manufacturing plants beginning in 2025, and by 2027, assembly for the North American market will commence in a Mexican facility.

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