BMW cancels battery supply contract with Northvolt

BMW announced the cancelation of a substantial $2 billion battery cell order with Swedish battery manufacturer Northvolt.

BMW and Northvolt inked a long-term agreement in 2020 for battery cells destined for BMW's fifth-generation batteries. These cells, to be manufactured in Sweden using 100% renewable energy, were initially slated for production this year. However, due to production delays and quality concerns, BMW decided to sever ties, turning to other companies for its battery supply needs.

Industry insiders suggest Northvolt has been struggling to ramp up production, falling two years behind schedule, and facing issues with low yield rates. The company's sole operational factory in Sweden is currently struggling to meet the demands of its partners, including BMW. Although Northvolt is also slated to supply next-gen battery cells for BMW's Neue Klasse X, the cancellation of the current order raises questions about future collaborations.

This development could also indicate trouble for Porsche, which relies on Northvolt for the battery cells in its upcoming all-electric successor to the 718. With Northvolt's production delays, the 718's launch, scheduled for next year, might face setbacks. Audi, another Northvolt partner, appears to have alternative suppliers, though, so it remains to be seen if it will be affected.

The prismatic cells ordered from Northvolt in the canceled contract were intended for current models like the i4, i7, and iX.

In the meantime, BMW will rely on Samsung SDI, a South Korean manufacturer that already supplies cells for the aforementioned models, to bridge the gap in its supply. Despite the cancellation, both BMW and Northvolt expressed a desire to maintain their partnership for future projects. Notably, BMW also holds a small stake in Northvolt.

This incident highlights the challenges faced by battery manufacturers in scaling up production to meet the growing demand for electric vehicles. Northvolt, despite securing a significant $6 billion investment for expansion and battery recycling in January, is still unable to clear all production hurdles.

Via