China’s EVE Energy Co Ltd (NYSE:EVEX) will provide BMW (ETR:BMW) with huge cylindrical batteries for its electric vehicles in Europe, according to two individuals familiar with the subject, as the German manufacturer follows Tesla Inc(NASDAQ:TSLA) in adopting the new technology.
One person with intimate knowledge of the arrangement stated that EVE has inked contracts to be BMW’s (ETR:BMW) major supplier of battery cells in Europe for its next series of electric vehicles scheduled to hit the market in 2025.
This year, Tesla (NASDAQ:TSLA) began manufacturing its new 4680 cylindrical battery, which measures 46 millimeters in diameter and 80 millimeters in length. It has stated that it expects the battery to reduce production costs and increase range in comparison to the existing 2170 cylindrical battery generation.
The batteries from Guangdong-based EVE (NYSE:EVEX) will be comparable in size, according to individuals who declined to be identified and were not authorized to communicate with the media.
According to company documents, EVE (NYSE:EVEX) also intends to construct a huge cylindrical battery facility in central China.
BMW’s (ETR:BMW) Chinese supplier EVE (NYSE:EVEX) did not respond to a request for comment. BMW stated that it will reveal battery-related news at the beginning of September, but denied additional comment.
BMW (ETR:BMW), which now use prismatic batteries, has made the switch to cylindrical batteries, which are gaining traction. Rectangular prismatic cells have been the most popular type of auto battery during the past two years because they can be packed more tightly, hence reducing costs. However, proponents of cylindrical batteries maintain that the cost-effectiveness of the newer, larger format cells has increased due to advances in energy density.
The world’s largest battery manufacturer, CATL, will also begin supplying cylindrical batteries to BMW (NYSE:BMW) in 2025.
There are significant expectations that these batteries will also have large-sized cells. CATL did not respond to a request for comment regarding proposed dimensions.
It was initially unclear how many batteries BMW would purchase from EVE (NYSE:EVEX) and CATL.
According to a person with firsthand knowledge of the arrangement, the Chinese company announced in March that it would construct a cylindrical battery production facility in Debrecen, Hungary. This would be the company’s first plant in Europe.
BMW is also establishing a plant in the same location where it wants to manufacture Neue Klasse-based EVs.
Government incentives are increasing demand for electric vehicles (EVs) in Europe and the United States, prompting Chinese battery and EV manufacturers to expedite plans to establish abroad production bases.
CATL stated last week that it would construct the largest battery facility in Europe, with an annual capacity of 100 gigawatt hours, also in Debrecen, in order to supply European automakers. Mercedes-Benz will be its largest client.
Analyst Duan Bing of Nomura stated that Chinese battery manufacturers who have relied on a massive domestic market dominated by prismatic cells will be forced to adopt a strategy similar to that of EVE (NYSE:EVEX) and CATL as a significant portion of future battery demand is anticipated to be for large cylindrical cells.
Eve, which was formed in 2001 by lithium-ion battery inventor Liu Jincheng and is also a supplier to Xpeng Inc, is a significantly smaller participant than CATL. According to data from the China Automotive Battery Innovation Alliance, it ranks seventh in China with a 2.3% market share.
Featured Image : Megapixl © Patongens
