BMW Cancels $2 Billion Battery Cell Order from Northvolt Due To Delays

BMW has canceled a €2 billion ($2.15 billion) order for electric vehicle (EV) battery cells from Northvolt. The cancellation comes as Northvolt struggles to meet production deadlines and quality expectations according to reports from German media outlets Handelsblatt and Manager Magazin.

The long-term supply contract between BMW and Northvolt was originally agreed upon in 2020. It was also intended to provide BMW with prismatic battery cells for its current generation of EVs, including the i4, i7, and iX. However, Northvolt’s delays in ramping up industrial series production, reportedly two years behind schedule, have forced BMW to seek alternative suppliers.

To fill the gap left by the cancellation, BMW is expected to turn to South Korean manufacturer Samsung SDI, which already produces battery cells for the affected models. As a result, this move should potentially ensure that BMW’s current EV production is not disrupted.

A BMW spokesperson confirmed the decision made by the company stating, “Northvolt and the BMW Group have jointly decided to focus Northvolt’s activities on the goal of developing next-generation battery cells. The BMW Group continues to have a strong interest in establishing a high-performance manufacturer of circular and sustainable battery cells in Europe.”

Despite the setback, both companies have expressed a desire to maintain their partnership for future projects. Interestingly, BMW holds a small stake in Northvolt and remains the main customer for the planned battery plant in Heide, Germany. In addition, Northvolt is still assigned to supply next-generation battery cells for BMW’s upcoming Vision Neue Klasse EVs, potentially starting around 2028.

Notably, this comes at a crucial time for Northvolt, which recently raised $5 billion in January to expand its Swedish operations and broke ground on a new gigafactory in Heide, Germany, in March. The company is also reviewing plans for another factory in Borlange, Sweden, amid reports of potential cancellation.

As the EV market requires reliable battery supply chains for automakers, this cancellation spotlights the importance of production targets and quality standards in the highly competitive EV battery industry to remain competitive. With BMW’s aiming for a third of its vehicle sales to be electric by 2026, issues with battery supply is a consideration that the company will keep a note of after this.

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