Northvolt likely losing billion-euro order from BMW

Four years ago, BMW signed a "long-term" supply contract for battery cells with Northvolt. However, the Munich-based company has now reportedly cancelled the billion-euro order with the Swedish company because Northvolt is behind schedule.

Image: Northvolt

As reported by the German publication Manager Magazin, BMW is said to have withdrawn an order worth two billion euros – this was agreed in July 2020 and provided for delivery this year. At the end of May, Northvolt “informed its investors of the painful cancellation”, the magazine wrote without citing sources. The Munich-based company is said to have “lost patience”.

Two reasons are said to have contributed to this. Firstly, the quality of the cells supplied by Northvolt is “not yet as expected”, although no details are given here. The more important point is probably the exact timing: Northvolt only has one factory in Sweden in operation so far (and that since 2022), all other plants are still in the planning stage. The company, which was founded in 2017, must supply all existing partners from this plant – which is obviously not possible to a sufficient extent in the case of BMW at present.

And at BMW, time is of the essence: prismatic cells have been ordered from Northvolt, which are installed in current models. The Northvolt cells should therefore be used in the i4, i7 or iX, for example. However, the days of these models, which with the exception of the iX are based on the CLAR mixed platform, are de facto already numbered: For the future, BMW is focussing on electric cars built on the new platform called Neue Klasse – where cylindrical cells from CATL, Eve Energy and Envision are used.

Northvolt should nevertheless remain a BMW partner

BMW therefore needs the prismatic cells now and not in a few years’ time when Northvolt has expanded and scaled up its production. The Munich-based company will no longer have any use for prismatic cells in a few years’ time, as current plans do not envisage any direct successors to the aforementioned models with prismatic cells. The next generation will utilise the 800-volt architecture and the cylindrical cells of the New Class.

Although BMW has apparently now cancelled the order, both sides want to keep future cooperation open. “We will continue to rely on Northvolt,” commented BMW. Northvolt also only says that BMW will remain a partner,” writes Manager Magazin. “The Munich-based company holds a small stake in the Swedish company; they are the main customer for the plant in Heide.”

BMW therefore has a stake in Northvolt and this connection will remain. According to the report, Northvolt will later complement the three known battery suppliers for the New Class. The large-volume cylindrical cells will then come from the North German plant. “The start would probably be in 2028 – if things go well,” says the magazine.

Problems with the battery supply of prismatic cells should not arise for BMW from the cancelled order. The South Korean manufacturer Samsung SDI, which already produces the cells for the models mentioned, can probably supply enough cells to meet the current demand.

The situation at Northvolt is probably less relaxed. The fact that a shareholder is withdrawing an order worth billions is likely to be seen as a kind of vote of no confidence – even if there are tangible reasons for this in BMW’s model planning. The problem: Northvolt is almost two years behind the original schedule for production in Skellefteå. Northvolt is only succeeding in reducing production waste there more slowly than hoped. This not only reduces the production volume of high-quality goods but is also expensive.

All customers of Northvolt cells are said to have sent experts to solve the production problems. These are said to include Scania, the Traton subsidiary that had developed battery cells specifically for use in e-trucks together with Northvolt. The VW Group, which owns 20 per cent of the Swedish cell manufacturer, wants to use the Northvolt cells at Audi and Porsche. According to Manager Magazin, Audi would have alternative suppliers, while Porsche is relying on Northvolt for the all-electric successor to the 718 – and will probably need the batteries next year.


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