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October 19, 2022 11:00 AM

BMW to invest $1.7B to build EVs in U.S.

The automaker will build at least six EV models at a new facility in South Carolina by 2030.

Urvaksh Karkaria
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    BMW X3 production Spartanburg.jpg

    BMW's factory in Spartanburg, South Carolina, builds X-badged models for global markets. Shown is X3 production.

    BMW is upgrading the jewel in its global manufacturing crown to position the crossover factory for the electric era.

    On Wednesday, the automaker announced a $1.7 billion investment to build at least six battery-powered models at the facility in Greer, South Carolina, by 2030.

    The project includes domestic sourcing of next-generation batteries and a $700 million battery-pack assembly plant to be built in nearby Woodruff. It also requires construction of a new battery-cell plant in the state by Japanese battery-maker Envision AESC, although few details on that part of the project have been disclosed.

    “With this latest investment, we future-proof our operations and prepare the plant for electrification and new technologies,” BMW Manufacturing CEO Robert Engelhorn said in a statement.

    BMW did not reveal which electric models it will build at the plant — the automaker’s largest in the world.

    But according to AutoForecast Solutions, U.S. production of the battery-powered iX5 crossover should start in late 2026, followed by the iX7 a year later. Production of the iX6 and iXM crossovers could begin in 2028.

    Established three decades ago, the factory, near Spartanburg, South Carolina, builds BMW’s high-volume, high-margin X-line of crossovers. Annual capacity at the sprawling facility is 450,000 vehicles.

    The export hub was prioritized during the pandemic and ensuing semiconductor shortage, enabling it to crank out record volumes last year.

    “Plant Spartanburg has been a cornerstone of the global success of the BMW Group,” BMW Group CEO Oliver Zipse said. “The ‘home of the X’ is also becoming the ‘home of the battery-electric vehicle’.”

    BMW will build the EVs in the assembly hall that currently builds the X3 and X4. Retooling will begin in 2024 and the first new vehicles will start production in 2025.

    The plant will see an expansion that will increase its total square footage by about a third, and annual production capacity will rise from about 180,000 vehicles currently to 290,000 following the investment.

    The new production center will be capable of building EVs, ICE and even hydrogen vehicles.

    BMW steps up on EVs

    BMW will invest $1.7 billion to build next-generation electric vehicles at its South Carolina assembly plant

    • $1 billion: Introduce EV production at Spartanburg, South Carolina
    • $700 million: Construct new battery pack assembly plant in Woodruff, South Carolina
    • 30GWh: Annual capacity of new South Carolina battery-cell plant to be built by Envision AESC to supply BMW

    With this new investment, BMW is ratcheting up the EV arms race with archrival Mercedes-Benz.

    Mercedes invested $1 billion to gear up its plant in Vance, Alabama., to begin production of battery-powered EQS and EQE crossovers. The factory will be able to turn out more than 100,000 EVs next year, or about one-third of its 305,000-unit annual capacity.

    These investments by the two German luxury brands are part of an “EV belt” emerging across the Southeast.

    Ford, General Motors and Volkswagen announced battery-vehicle assembly plants in Tennessee, where Nissan also builds the Leaf EV. Volvo will build electric crossovers at its Ridgeville, South Carolina, factory late next year.

    Meanwhile, Georgia has landed multibillion-dollar EV factories from Hyundai Motor and Rivian Automotive.

    Battery plant

    To supply the new BMW investment, Envision AESC will build a battery-cell plant with an annual capacity of up to 30 gigawatt hours. That could supply enough batteries for 300,000 EVs a year, AutoForecast EV analyst Conrad Layson said.

    The South Carolina plant marks Envision’s second such announcement this year. In April the supplier said it will build a $2 billion factory in Bowling Green, Kansas, to supply a new generation of battery components for Mercedes. That plant will employ 2,000 workers and be able to supply battery components for 300,000 vehicles a year by 2027.

    Envision joins a cabal of battery suppliers now constructing cell factories in the U.S., including Samsung, LG Chem and SK Innovation. Recent passage of the Inflation Reduction Act incentivizes North American EV assembly and battery manufacturing.

    “With its second U.S. facility in five months, Envision AESC is saying, ‘I’m Spartacus,’ as it establishes over 10 times the capacity it has at its current plant in Smyrna, Tennessee,” Layson said.

    The EV and battery-production investments position BMW to qualify for some of the $7,500 federal EV tax credit under the Inflation Reduction Act.

    Forecast for BMW's EV rollout
    • iX5: late 2026
    • iX7: mid-2027
    • iX6: early 2028
    • iXM: late 2028

    Source: AutoForecast Solutions

    New battery technology

    Envision will make a round lithium ion battery cell in South Carolina to power BMW’s Neue Klasse platform electric vehicles.

    BMW said this new generation of batteries uses more nickel and silicon and less cobalt — leading to a 20 percent energy density increase, 30 percent faster charging and 30 percent longer range than previous generations.

    Layson said the new Envision-made battery cell could be cylindrical and similar in form to Tesla’s 4860 battery, which promises five times more energy capacity.

    “Envision’s new round design could sacrifice cell height for an increase in diameter to achieve its claimed 20 percent energy increase,” Layson said.

    The cells will be produced with renewable energy and partly use recycled cobalt, nickel and lithium to cut production-related carbon emissions as much as 60 percent. New packaging technology will help reduce battery-pack costs by up to 50 percent.

    Wait and watch

    BMW Group is taking a pragmatic approach to zero-emission vehicles.

    Whereas Mercedes-Benz and Volvo proclaimed their intent to be all-electric brands globally by 2030, BMW is spreading its bets. BMW sees continued demand for combustion engines and will begin limited production at the end of the year of a hydrogen fuel-cell version of its X5 large crossover.

    “If you want to be resilient, you have to be flexible,” Zipse said earlier. “We think the [EV] infrastructure will not move as fast as market demand.”

    The German marque expects about half of its sales to be full-electric by the start of the next decade.

    Demand is brisk in the U.S. for BMW’s recently launched EVs — the i4 compact sedan and iX midsize crossover. BMW has sold 6,900 of the models in the U.S. this year, including more than 4,300 in the third quarter.

    The company is looking to sell 200,000 EVs globally this year — double the number it delivered in 2021.

    BMW of North America sales boss Shaun Bugbee believes EV demand in the U.S. will soar as longer-range models and expanding charging infrastructure win over skeptical Americans.

    “We see very strong demand for EVs,” Bugbee said, noting the limiting factor is vehicle supply.

    Zipse has vowed to “push the company to the limits of production capability” to catch up with demand.

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