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November 02, 2022 02:42 PM

How BMW plans to supply parts for EV production

BMW faces the task of converting its established global supply chain to also produce parts for EVs.

Urvaksh Karkaria
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    Joachim-MAIN_i.jpg
    Urvaksh Karkaria

    Joachim Post helps ensure that 30 million parts reach BMW's worldwide production hubs daily.

    PALM SPRINGS, California, USA -- Before BMW can begin producing electric vehicles at its sprawling U.S. factory in South Carolina, the German luxury brand must develop a complex EV supplier network in the region.

    Overseeing that critical development is the job of Joachim Post, a 20-year company veteran and BMW Group's head of procurement and supply chain.

    Post helps ensure that 30 million parts reach the company's worldwide production hubs daily. As BMW switches factories to building EVs, Post is rethinking how new technologies and raw materials are sourced. The bottom line: Building EVs means suppliers must step up and manufacture the new parts for them.

    "The industrialization of all the assembly, of all the components, is sophisticated and high tech and needs time," Post told Automotive News at a media event here this week. "We are focused on that, but it will be tough."

    Building EVs

    BMW will invest $1.7 billion to build next-generation EVs at its South Carolina assembly plant
    $1 billion: Introduce EV production in Spartanburg
    $700 million: Construct new battery pack assembly plant in Woodruff
    30 gWh: Annual capacity of new South Carolina battery-cell plant to be built by Envision AESC to supply BMW

    New supply chain

    Last month BMW announced a $1.7 billion investment to build at least six battery-powered models at its South Carolina plant by 2030. The project includes domestic sourcing of next-generation batteries and construction of a $700 million battery-pack assembly plant in nearby Woodruff.

    Post and his team must help the suppliers for BMW's combustion engine vehicles adapt their businesses to provide as many EV components as possible. Using the existing supplier base is essential because those companies have the expertise, said Post, who has a doctorate in mechanical engineering.

    "It's not a big issue to bring them to transformation," he said. Combustion engine parts suppliers can repurpose a factory to produce housings and bearings for electric motors, while suppliers working on engine cooling can adapt their know-how to cooling batteries.

    But in the case of EV powertrain components such as battery cells and electric motors, BMW wants to develop those technologies in-house or tap into a new ecosystem of suppliers.

    "A lot of new technologies you cannot easily buy on the market," Post said, noting the automaker is developing electric motors and battery-pack assembly in-house.

    "This is a key technology for us," he added. "It's important for us to have the know-how in the company for that."

    Under pressure

    EVs will stress existing pressure points on an already strained supply chain.

    For example, the new generation of high-tech vehicles is driving additional demand for scarce semiconductor chips. EVs require up to 30 percent more chips than combustion engine vehicles to power battery management systems and electric motor controls, Post noted.

    Another supply chain challenge involves sourcing scarce raw materials such as lithium and cobalt for EV batteries. Post said he expects this raw material situation to be "tough until 2030 at least."

    With mining operations requiring long lead times due to environmental and governmental regulations, automakers such as BMW and Mercedes are directly signing long-term contracts with mining companies to source raw materials on behalf of their battery cell suppliers. But recycling these raw materials will be vital in helping supply meet the new EV-fueled demand.

    "We are in contracts with cell suppliers to use recycled material," Post said. "Our target is to reuse 90 percent of the raw materials in the battery."

    Sourcing

    Regionalization of critical components and raw materials "helps us to be more resilient to global impacts," Post said. But it's not feasible yet to source 100 percent local content. The Spartanburg plant's EV supply chain will extend well beyond South Carolina, with some components coming from Europe and Asia.

    The emphasis on regionalization was underscored when COVID-19 and a cascade of parts shortages changed how and where automakers source vehicle components.

    "Supply chain management will never be like it has been in the past," Post said.

    To ensure greater supply chain visibility, BMW is investing in more robust data management systems.

    "You must know in every control unit in our cars which kind of semiconductor is there, and from which location does it come," Post said. If there is a disruption in a particular region, his team can quickly identify which suppliers and cars are affected, he added.

    "Data is the basis for controlling and managing the supply chain," Post said.

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