According to reports in the German "Handelsblatt" and "Manager Magazin" on June 20th, BMW has canceled a €2 billion electric vehicle power battery order with Northvolt.

BMW signed the supply contract with Northvolt in July 2020, originally planning to start receiving batteries from Northvolt's "100% wind and hydroelectricity-based" manufacturing "gigafactory" in Skellefteå, Sweden, from 2024.

BMW is unwilling to comment on the reasons for the order cancellation. However, according to the media, the Swedish lithium-ion battery manufacturer has encountered difficulties in scaling up to mass production at an industrial level. Northvolt was unable to deliver the long-term battery supply contract reached with BMW in 2020 on time, and the product quality of the supplied batteries was questionable. The media stated that "Northvolt is two years behind schedule and generates too much waste." BMW has lost patience with this order contract.

South Korean Samsung SDI will fill the supply gap left by BMW due to the cancellation of the Northvolt order. In November 2019, the BMW Group signed a long-term (extended to 2031 in 2021) supply contract worth €2.9 billion with Samsung SDI to supply the 5th generation electric drive system and power batteries.

 

BMW also stated, "There is still great interest in establishing a high-performance circular and sustainable battery manufacturer in Europe."

However, as one of the shareholders of Northvolt, BMW has not completely canceled its cooperative relationship with Northvolt. A BMW spokesperson said, "Northvolt and the BMW Group have jointly decided to focus Northvolt's activities on the development of the next generation of batteries."

It is reported that Northvolt will still provide the next-generation batteries required by BMW's electric vehicle models based on the 800-volt Neue Klasse platform. The battery "gigafactory" that Northvolt started construction on near Heide, Germany, in March is expected to supply BMW with high-capacity cylindrical batteries from 2028. Previously, BMW had signed cooperation on large cylindrical batteries with CATL, EVE Energy, and Envision AESC.

 

In January of this year, Northvolt announced that it had raised $5 billion for the expansion of the Northvolt Ett "gigafactory" in northern Sweden and the construction of a battery recycling plant. This financing, based on "long-term purchase agreements worth more than $55 billion signed with partners such as BMW, Scania, Volvo Cars, and Volkswagen," is the largest green loan in Europe to date.

In March of this year, a battery "gigafactory" of Northvolt located near Heide in Schleswig-Holstein, Germany, broke ground after receiving €902 million in aid from the German government. German Chancellor Olaf Scholz and Minister for Economic Affairs and Climate Action Robert Habeck attended the groundbreaking ceremony. The factory is scheduled to start production in 2026.

 

In addition, Northvolt recently stated that it is reviewing plans to build a new factory in Borlange, Sweden. After the Swedish newspaper Dagens Industri reported the cancellation of the factory, Northvolt has not made a subsequent decision.

Since its establishment in 2017, Northvolt has planned more than six battery factories and battery recycling plants in Sweden, Poland, Germany, the United States, and Canada. However, so far, only one factory has been put into production in Sweden (in 2022), and other factories are still under construction or in the planning stage, and their construction progress is not enough to support the demand of local European customers.

The Volkswagen Group also holds a 20% stake in the Swedish battery manufacturer and hopes to use Northvolt batteries in Audi and Porsche models. However, according to Manager Magazin, Audi will have alternative suppliers, and Porsche may use Northvolt batteries next year. It is said that all customers of Northvolt batteries have dispatched experts to resolve production issues.