BMW has awarded a contract worth just over a billion euros ($1.16 billion) to China's lithium battery maker Contemporary Amperex Technology Ltd (CATL). The deal will allow China's biggest lithium battery maker to build a factory to produce cells for electric cars in Europe, BMW spokesman Glenn Schmidt said.
CATL is scouting potential locations for a battery production facility in Europe with the German state of Thuringia encouraging the company to use a site near Erfurt in eastern Germany. CATL is also exploring locations in Poland and at least one other country in Europe, sources told Bloomberg.
European auto-parts makers have been reluctant to allocate the significant funds needed to challenge dominant Asian producers Samsung SDI, LG Chem, and Panasonic. Robert Bosch decided earlier this year against making battery cells, citing costs exceeding 20 billion euros ($23.5 billion).
Last month, Daimler placed an order with CATL to buy electric car battery cells.
CATL is banking on a state-led Chinese drive to curb pollution from traditional combustion engines and increase the country's presence in the overseas new energy vehicle (NEV) market.
CATL made its debut on the Shenzhen stock exchange earlier this month and aims to use the proceeds to finance its 24 gigawatt-hour (GWh) capacity expansion.
Based in Fujian province, it sold 11.85 GWh of lithium batteries last year, the highest in the world. It also aims to expand into downstream car production and was listed as a "sizeable investor" in a $500 million fundraising for Chinese NEV start-up Byton.
China's biggest NEV producer, BYD, this week announced the launch of what will become the world's biggest lithium battery plant, and aims to raise its own battery production to 60 GWh a year by 2020.
China accounted for more than half of global new energy vehicle ownership last year, and sales rose 141.6 percent in the first five months of 2018, hitting 328,000 units.
As part of its efforts to increase its global reach, China is also trying to take the lead when it comes to the standardization of battery technologies and designs.