BMW increases orders of batteries as electric vehicle demand grows

Munich

BMW AG has boosted orders for battery cells to keep pace with accelerating demand for electric cars that made up for more than 11 per cent of deliveries during the first half of the year.

The German carmaker now has contracts for more than 20 billion euros (S$31.8 billion) of batteries, up from 12 billion euros previously, chief executive officer Oliver Zipse said in an interview. The cells are destined for i4 sedans, iX sport utility vehicles and other models that BMW is producing till 2024. The company plans to start switching to a new generation of batteries the following year.

"We're following the market," Mr Zipse said. "The first half has shown that we're growing and gaining market share. We're right in the middle of electrification."

Carmakers are reeling from a crippling shortage of semiconductors that has put the industry on high alert to identify other vulnerabilities in their supply chains. Access to enough battery cells and raw materials such as cobalt and nickel will be critical to established carmakers' electric transformations. EV leader Tesla has gone so far as to clinch metal-supply deals with miners.

BMW's increased cell orders are spread across China's Contemporary Amperex Technology and Eve Energy, South Korea's Samsung and Sweden's Northvolt.

While BMW has readied a response to growing EV sales, it has continued to be constrained by the dearth of semiconductors. Last month, the company predicted the situation would worsen till the end of the year.

"We said some weeks ago that the second half would be more difficult, and that's what we're seeing now," Mr Zipse said. "It's more difficult, and the problem is here to stay for many months." BLOOMBERG