During a recent visit to China alongside German Chancellor Friedrich Merz, BMW Group CEO Oliver Zipse signed a memorandum of understanding with CATL, formalizing a partnership aimed at lowering the embedded carbon footprint of BMW’s electric vehicles by reworking battery sourcing and production processes.
The timing reflects a structural challenge for European automakers. As battery packs account for a substantial share of lifecycle emissions in battery electric vehicles, automakers face mounting regulatory and investor pressure to demonstrate reductions not only at the tailpipe but across upstream materials and manufacturing. BMW’s decision to focus explicitly on supply chain emissions rather than headline vehicle specifications suggests an acknowledgment that incremental gains in drivetrain efficiency are no longer sufficient to meet tightening disclosure and compliance requirements.
China remains central to that strategy. BMW has invested more than 120 billion yuan in its production base in Shenyang, building four R&D and innovation centers alongside three software entities. This localized footprint underpins BMW’s stated “In China, For China” approach, but it also reflects a pragmatic calculation. China dominates global battery manufacturing capacity, and CATL alone supplies a significant share of the world’s lithium-ion cells, giving it leverage over cost, chemistry evolution, and increasingly, emissions performance.
The partnership also aligns with BMW’s next product cycle. The automaker’s Neue Klasse platform, designed as a dedicated battery electric architecture, is intended to reset cost structures and performance benchmarks across its EV lineup. The first China-produced model under this platform, the BMW iX3 Long Wheelbase, is scheduled for a global debut at Auto China 2026. While BMW emphasizes design optimization for Chinese consumers, including increased cabin space, the more consequential shift lies beneath the floor. Battery design and sourcing will largely determine whether Neue Klasse vehicles can meet both margin and sustainability targets.
CATL’s prior announcement in December 2024 that it would supply cylindrical batteries for Neue Klasse vehicles starting in 2026 adds context to the memorandum. Cylindrical cells are often associated with improved thermal management and manufacturing scalability, but their climate impact depends heavily on energy inputs and materials sourcing. By embedding carbon reduction objectives directly into the supplier relationship, BMW appears to be seeking measurable improvements rather than relying on generic claims of greener chemistry.
This approach is not without controversy. Deeper reliance on Chinese suppliers exposes European automakers to geopolitical risk and potential regulatory scrutiny as the European Union tightens rules around strategic dependencies and supply chain transparency. At the same time, alternatives within Europe remain limited. Domestic battery capacity is expanding, but not at a scale or pace that can support the volume requirements of mass market EV programs in the near term.
