BMW has placed a massive battery order with Chinese battery producer CATL, according to a report in a German business daily.

Handelsblatt reports that BMW Group CEO Harald Krüger told the newspaper that BMW is ordering several billions of euros worth of batteries from CATL, a move that frustrates EU hopes that it would find a European supplier.

The large batteries order from BMW is for its upcoming electric cars and the report said CATL will build a special factory in Germany to supply BMW. Reports in Germany say the investment may be made in the eastern German city of Erfurt.

Krüger told Handelsblatt that while a European producer would make sense if it was competitive, BMW needs a supplier 'who is already there.' The agreement with CATL to build a factory in Germany to supply the order appears to be an important element in the supply deal.

BMW is investing EUR200m in its own battery research in Munich with a focus on higher energy density solid-state batteries that will likely hit the market in the mid-2020s.