Expected purchase could be a sound long-term investment for the companyby Kirby Garlitos, on
With an eye towards the future, BMW is looking to secure a 10-year supply of cobalt and lithium, two important ingredients in the production of high energy density Li-ion battery cells. The decision to procure the supply is part of a new long-term strategy that would allow the German automaker to secure significant supplies of cobalt and lithium in the face of skyrocketing prices of both metals.
The decision to procure the supply is part of a new long-term strategy that would allow the German automaker to secure significant supplies of cobalt and lithium in the face of skyrocketing prices of both metals.
The news doesn’t strike as headline-worthy on the surface, but it could turn into one of the most significant investments BMW has ever made in the long-term, especially for a company that doesn’t even make its own battery cells. A change in position could be in store with this purchase, something that Markus Duesmann, BMW’s head of supply chain, hinted at in a conversation with German publication Frankfurter Allgemeine Zeitung. "The aim is to secure the supply all the way down to the level of the mine, for ten years.”
“The contracts are ready to be signed,” he added.
So, why is this a big deal for the future? As we mentioned, cobalt and lithium are two important metals that are used in the production of the Li-ion battery cells. These battery cells, in turn, are used to power electric cars. Unfortunately, the supply of cobalt and lithium is expected to dwindle in the coming years, and if there’s no alternative found, prices for the two metals could soar even more than they have been in the past few years. The price of lithium, for example, has more than doubled over the last ten years. As for cobalt? It’s tripled in the last three years.
The German automaker is making a pre-emptive move by increasing its supply of the metals
That reality — and the future — is staring BMW in the face. So, instead of trying its luck on an uncertain future for these resources, the German automaker is making a pre-emptive move by increasing its supply of the metals. It’s a solid move that sets up BMW’s electrification plans for the future.
It’s worth noting too that BMW’s own all-electric efforts have remained idle since the launch of the i3 back in 2013. But with the company now embarking on a long-term plan to introduce 12 all-electric cars by 2025, securing a 10-year supply of cobalt and lithium is a huge step in achieving that goal. It’s also the latest in a string of investments the automaker has made to see that future through. Last year, Bimmer invested $240 million in a new battery cell center.
At the very least, purchasing a supply of the raw materials needed to create Li-ion battery cells puts BMW in an advantageous position in the years to come. On top of that, it tells you that the company is serious about its all-electric efforts.
Read our full review on the 2017 BMW i Vision Dynamics Concept.