Why BMW decided to make batteries in the US

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Image Source: Bloomberg

To get its sizable Spartanburg, South Carolina factory ready to build electric vehicles and SUVs. BMW just announced an expenditure of $1.7 billion. That amount was $700 million for the construction of a battery manufacturing facility.

BMW’s largest manufacturer in the entire globe is Spartanburg. However, only 40% of the 40,000 SUVs it manufactures each year are sold in North America. The remainder is shipped to 120 other nations.

It’s one of the recent announcements as automakers get ready to build more electric vehicles. Recently announced battery plant construction projects include those from Mercedes, Hyundai, Honda, and others. In addition, after BMW’s statement, the Biden administration passed the Inflation Reduction Act.

The regulations only permit consumer tax credits for electric vehicles that achieve ever-stricter requirements for producing the vehicles and their batteries in the US. They also set limits on the price of the vehicles, the buyer’s income, and US sourcing requirements for battery raw materials. As a result, only if the purchasers and the vehicles comply with the rules can they receive the full tax credits.

Logistics factors

But according to BMW Chairman Oliver Zipse in an interview with CNN Business. That restriction had no bearing on the company’s choice to put battery production in South Carolina. Instead, simple logistics were a considerably more critical consideration.

In addition to being unnecessary, the IRA’s regulations, according to Zipse, will hurt the same American employment they intend to safeguard.

No matter how “American-built” a car is, the IRA doesn’t offer any benefits if it isn’t sold in the US. However, Zipse emphasized that protectionist measures that seek to bar American-made vehicles from American consumers risk inciting retaliation and jeopardizing lucrative export trade.

Zipse also cautioned about the unforeseen implications of laws that forbid the sale of non-zero-emission vehicles beyond a specific date. Such as those in some US states and Europe. One possible consequence is a drop in industry-wide sales.

Only a tiny percentage of consumers will be able to have an electric vehicle charger at home, according to Zipse. Therefore many may opt to keep their gasoline vehicles longer or purchase used gasoline vehicles in their place.

Some automakers, including BMW’s rivals General Motors and Mercedes-Benz, aren’t concerned about declining sales. And they have declared intentions to convert to all-electric vehicles by a specific date. Meanwhile, BMW has never stated that it will only produce electric vehicles.

BMW SUVs are not all-electric

Unlike certain automakers, like GM and Volkswagen, which use separate engineering platforms, electric vehicles are completely different from gasoline-powered automobiles. For instance, BMW designs their cars as electric, plug-in hybrid, or only gasoline-powered automobiles. BMW executives highlight this adaptability to meet market demands for various vehicle types.

Instead, he argued, authorities ought to implement progressively stricter emissions regulations while leaving it up to automakers to determine the most effective means of achieving those goals. But unfortunately, that strategy has yet to, as of now, stop global warming from intensifying.

However, Zipse assured that BMW could handle whatever the authorities decide.

BMW expands Germany’s EV battery capacity

According to a statement from BMW, a new battery assembly line and additional cell varnishing lines will be at its Leipzig, Germany, plant.

According to the auto-tech website Electrek, the premium automaker claims that it will use the batteries for its completely electric Mini Countryman SUV.

An earlier report said that BMW was streamlining production by shifting the manufacturing of its electrified Mini models from the UK to Germany and China.

Ahead of numerous eagerly anticipated Mini EV debuts, the luxury manufacturer has just announced adding more battery capacity.

The Mini Countryman’s all-electric variant, will be made at the Leipzig factory, will debut in 2023.

In addition, the brand’s first all-electric MINI crossover sport activity vehicle, the Mini Aceman,will debut in 2024.