The Era of Power Battery-BMW's New Factories

When Chinese power battery enterprises were elaborate to keep away from the United States, a good opportunity came from Europe.

On 9th Sep., BMW officially announced that six battery factories will be built around the world, two each in Europe, China and North America. Every factory will have a production capacity of 20GWh. The four in Europe and China will be built by the Chinese battery companies CATL (Contemporary Amperex Technology Co. Ltd.) and EVE Power.

BMW claimed that these factories are built for the needs of its next generation of electric models starting from 2025. An agreement worth over 10 billion euros on supply of battery cells has been offered to CATL and EVE Power.

What is the concept of a large order exceeding 10 billion euros?

As you may know, BMW's procurement budget for the next generation of batteries is only 20 billion euros. That is, BMW has invested more than half of its budget and put two-thirds of its factory construction work on Chinese companies.

At present, the location of the Chinese factories is not yet known. However, the two European factories will be located in the city of Debrecen, Hungary with the disclosure of the two battery companies.

This location does not come as a surprise.

In Mar. 2022, Eve Power announced the land purchase in Debrecen and planed to build a factory to produce batteries. In Aug., CATL announced that it would invest no more than 7.34 billion euros to build a battery factory in Debrecen. It aims to supply the needs of European customers such as Mercedes-Benz, BMW, Volkswagen and etc.. The factory will be constructed in stages. The total production capacity is expected to be 100GWh after completion.

Now, the considerations behind the decisions of the two companies have come to light. Here we usher in a battery cell layout right across the Eurasian continent.

In fact, BMW has a deep relationship with the CATL.

CATL developed from ATL. At first, CATL was only a department of automotive power battery in ATL.

Who is CATL’s batteries customer? It's BMW. As early as 2011, BMW caught a glimpse of ATL-the future to be power battery giant CATL. Not only BMW trusted them with his battery supply of electric models, but also generously provided hundreds of pages of technical documents. BMW’s support has laid a solid foundation for the successful transformation of CATL.

Nevertheless, BMW also invested money directly. In Jul. 2018, one month after the listing of CATL on the GEM., BMW Brilliance, a joint venture of BMW in China, quickly signed a long-term purchase agreement as well as planed customized production lines with CATL. Which included prepayment of RMB 2.8525 billion for purchase agreement and RMB 815 million for customization!

According to news report, BMW owned this production line, which was built and produced in accordance with BMW's technical requirements. It was"highly customized". At that time, BMW Brilliance also had the priority to participate in the equity financing of CATL. Up to now, all the batteries of BMW Brilliance’s electric models in China have been supplied by CATL.

Therefore, this large order of tens of billions brought by BMW can be viewed reconnecting with the CATL. Zeng Yuqun, chairman of CATL, once said: "BMW Group is a special and important partner of CATL."

A "special" partner, which really means a lot!

This is a different era.

Back to the early 1980s, Chinese batteries were totally a mess.

At that time, paste-type batteries were used. Although this kind of battery played an important role in China's aid to Vietnam and the border war, the quality was really bad with leakage and current instability. That was the reason why the dry batteries seized on the battlefield were treated as treasure.

Nowadays, nobody cares about that stuff. China has produced half of the world's batteries around 2008. Today China has a huge production capacity for new energy batteries, which even makes the United States feel threatened.

FROM 智谷子 智谷趋势 20220914