BMW AG’s needs for car-battery raw materials such as cobalt and lithium will surge 10-fold by the middle of the next decade, pushing the German carmaker increasingly to forge long-term deals as shortages loom.
Purchase contracts with five- to 10-year time frames are close to being completed, the manufacturer’s head of procurement told reporters in Munich Friday. Concerns about supply bottlenecks, especially for cobalt, have prompted auto producers including Volkswagen AG to step up efforts to ensure they have enough. BMW plans to offer 25 electrified vehicles by 2025, while VW is targeting a 300-model battery-powered lineup by 2030.
“We’ve been intensively focusing on how to manage future cobalt supply for about a year now,” said Markus Duesmann, the BMW purchasing executive. “Before, it wasn’t clear just how quickly demand will accelerate.”
Prices for cobalt, which helps conduct electricity and is comparatively light, have more than doubled this year. Glencore Plc, the largest producer of the metal, said this week that it will be in such short supply, auto manufacturers will have to come up with alternative sources. Likewise, the price of lithium has jumped.
“By 2025, we’ll need up to 10 times as much of the battery raw materials than we do currently,” Duesmann said, noting that Munich-based BMW is set this year to sell a minimum 100,000 cars that are at least partly powered by the technology.
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