BMW Group says it has signed a cobalt supply contract with Moroccan mining company Managem Group.

"The contract has a volume of around 100 million euros," said Andreas Wendt, member of the Board of Management of BMW AG responsible for Purchasing and Supplier Network. With this order the BMW Group will cover about a fifth of its cobalt needs for the fifth generation of our electric drive-trains. The company will source the remaining four fifths of its cobalt needs from Australia. The contract between the BMW Group and the Managem Group is for a term of five years (2020 – 2025). The two companies already signed a memorandum of understanding on the direct purchase of cobalt from Morocco in Marrakesh in January 2019.

"Cobalt is an important raw material for electromobility. By signing this supply contract with Managem today, we are continuing to secure our raw material needs for battery cells," said Wendt. "We are systematically driving electrification of our vehicle fleet. By 2023, we aim to have 25 electrified models in our line-up – more than half of them fully-electric. Our need for raw materials will increase in line with this. For cobalt alone, we expect our needs to roughly triple by 2025."

Sustainability plays key role in expanding electromobility

Sustainability and security of supply are important factors for electromobility. "For us, ethically responsible raw material extraction and processing starts at the very beginning of the value chain: We take a keen interest in battery cell supply chains that extends all the way down into the mines themselves," said Ralf Hattler, Senior Vice President Purchasing Indirect Goods and Services, Raw Material, Production Partner at the BMW AG. Compliance with environmental standards and respect for human rights is the top priority. "Sustainability is an important aspect of our corporate strategy and plays a key role in expanding electromobility. We are fully aware of our responsibilities. Cobalt and other raw materials must be extracted and processed under ethically responsible conditions," emphasised Wendt. The highest sustainability standards apply to cobalt extraction at the Managem Group.

The BMW Group already publishes the countries of origin for the cobalt it uses on its website (see here). For the fifth generation of battery cells, the company has also restructured its supply chains and will source lithium, as well as cobalt, directly from 2020 and make these raw materials available to its two battery cell manufacturers, CATL and Samsung SDI. This ensures full transparency over where raw materials come from. The BMW Group will also cease to use rare earths in its fifth-generation electric drive trains from 2021 on. "This means we will no longer be dependent on their availability," said Wendt.

The battery cell value chain

The BMW Group says it possesses extensive in-house expertise throughout the entire value chain for battery cell technology. In November 2019, the company opened its Battery Cell Competence Centre in Munich, with the aim of advancing battery cell technology and introducing it into production processes. The production of battery cell prototypes makes it possible to analyse and fully understand cell value creation processes. "Whether we will produce cells ourselves in large numbers at a later date will depend on how the supplier market develops," said Wendt.

The BMW Group will obtain battery cells for its fifth-generation electric drive trains from CATL (order volume: 7.3 billion euros, contract period: 2020 to 2031) and Samsung SDI (order volume: 2.9 billion euros, contract period: 2021 to 2031). "This will secure our long-term need for battery cells. Every cell generation is awarded to the manufacturer with the leading technology and most competitive economic aspects worldwide. This ensures we always have access to the best possible cell technology," added Wendt.

A decisive aspect for the BMW Group: As e-mobility gains more and more traction, the focus of CO2 reduction shifts to upstream added value. As a leader in sustainability, the BMW Group has therefore reached a contractual agreement with its cell manufacturers that they will only use green power to produce fifth-generation battery cells for the BMW Group. This ensures that the company will save around ten million tonnes of CO2 over the next decade. Especially, the energy-intensive production of high-voltage batteries is a major and very effective lever for reducing CO2, because up to 40 percent of a fully-electric vehicle's emissions come from battery cell production alone. So that is precisely where the BMW Group is focusing its efforts.

The BMW Group produces batteries in-house at its plants in Dingolfing (Germany), Spartanburg (USA) and at the BBA plant in Shenyang (China). The BMW Group has also localised battery production in Thailand, where it works with the Dräxlmaier Group.

To access the cell technology that is vital for electromobility, the BMW Group has formed a technology consortium with Swedish battery manufacturer Northvolt and Umicore, a Belgian developer of battery materials. The collaboration will focus on creating an end-to-end sustainable value chain for battery cells in Europe, extending from development to production to recycling. In the face of rapidly growing demand for battery cells, recycling of battery components and extensive reuse of raw materials will be the best way to close the materials loop as far as possible.

BMW Group: 25 electrified models by 2023

The company says it will have 25 electrified models in its line-up by 2023. Flexible vehicle architectures for fully-electric vehicles, plug-in hybrids and models with combustion engines allow the company to respond quickly to changing conditions and form the basis for this. More than half of the 25 models will be fully electric. The BMW Group will double its sales of electrified vehicles between 2019 and 2021 and anticipates a steep growth curve up to 2025: Global sales of BMW electrified vehicles should increase by an average of over 30 percent each year, the company claims. In Europe, the company is also following an ambitious growth logic: By 2021, electrified vehicles should - it says - make up a quarter of BMW Group's new vehicle fleet, reaching a third in 2025 and half of sales in 2030.