BMW has signed a contract worth over a billion euros with China's biggest lithium battery maker Contemporary Amperex Technology Ltd (CATL) to build a factory to produce cells for electric cars in Europe.
CATL is currently scouting possible locations for a battery production facility in Europe with the German state of Thuringia encouraging the company to use a site near Erfurt in eastern Germany.
European auto-parts makers have been reluctant to allocate the significant funds needed to challenge dominant Asian companies such as Samsung SDI, LG Chem, and Panasonic. Earlier this year, Robert Bosch decided against the manufacturing of battery cells exceeding €20 billion in costs.
CATL aims to curb pollution from traditional combustion engines and increase the country's presence in the overseas new energy vehicle (NEV) market. The company made its debut on the Shenzhen stock exchange earlier this month and aims to use the proceeds to finance its 24 gigawatt-hour (GWh) capacity expansion.
Headquartered in Fujian , it sold 11.85 GWh of lithium batteries in 2017, the highest in the world. It intends to expand into downstream car production and was listed as a "sizeable investor" in a $500 million fundraising for Chinese NEV start-up Byton.
China's biggest NEV producer, BYD, recently announced the launch of what will become the world's biggest lithium battery plant, and aims to raise its own battery production to 60 GWh a year by 2020.
Last year, China accounted for more than half of global new energy vehicle ownership with sales rising by 141.6 percent in the first five months of 2018, hitting 328,000 units.
Last month, Daimler placed an order with CATL to buy electric car battery cells.