BMW to invest EUR800 million in Mexico to ramp up EV battery production

Peng Chen, DIGITIMES Asia, Taipei 0

BMW will build a new battery assembly center at its plant in San Luis Potosi, Mexico. Credit: BMW

BMW showed its EV ambition for the North American market. The premium automaker announced a EUR800 million (US$863.3 million) investment in Mexico, mainly to build an assembly center for high-voltage batteries. The new battery production will support its fully-electric NEUE KLASSE models.

BMW held an event on February 3 for the announcement in San Luis Potosi, where its plant is located. Mexican President Andres Manuel Lopez Obrador also joined the event.

The carmaker said the plant started operation in 2019, producing three models that supply 74 global markets. As BMW transitions to EVs, the production base will play an essential role.

Milan Nedeljkovic, BMW's board member responsible for production, said the San Luis Potosi plant aims to begin producing the NEUE KLASSE models from 2027 onwards. Therefore, the company has to expand the plant to include battery production facilities.

According to BMW's announcement, EUR500 million is earmarked for building a new high-voltage battery assembly center. The new facility will create more than 500 new jobs.

Reuters reported that the rest of the fund will be used to upgrade the body shop and construct a new assembly line for battery pack installation. Harald Gottsche, president and CEO of the San Luis Potosi plant, said the construction will start at the beginning of next year.

BMW said the first cars of the NEUE KLASSE will come off the production line in its Hungary plant in 2025, followed by the main plant in Munich. The all-electric series will be equipped with newly-developed round lithium-ion battery cells.

It added that the new cells will increase energy density by over 20%, bringing up charging speed and range by 30%.

The US is poised to scale up its EV market with requirements or incentives provided by Inflation Reduction Act (IRA) and other policies. According to IRA, an EV's final assembly has to occur in North America to be eligible for the tax credits.

Many automakers have explored potential sites in Mexico due to its proximity to the US. Marcelo Ebrard, Mexico's foreign minister, said Audi, General Motors, Fiat Chrysler and Tesla had also said they are interested in making cars in the country, according to a Reuters' report. He also said Mexico will provide the carmakers with all the facilities it can.

Tesla is reportedly to build a plant near a new airport in Mexico City, but the company has not confirmed it.