BMW has signed a deal with Northvolt for 2 billion euros ($2.3 billion) to supply battery cells to power the automaker's electric vehicles.
Northvolt, a Swedish company started by two former Tesla executives, will manufacture the cells using renewable electricity at a new plant in northern Sweden and deliver them starting in 2024 as part of a long-term contract, BMW said in a statement Thursday.
Local access to batteries is becoming key for automakers trying to become less dependent on dominant suppliers in Asia.
Northvolt will become BMW's third major supplier for the technology, along with China's Contemporary Amperex Technology Co. and South Korea's Samsung SDI.
The deal is also meant to aid BMW's push into electric cars. The automaker plans to introduce five new battery-powered vehicles through next year and offer more than 12 electric models by 2023.
BMW unveiled the iX3 SUV Tuesday, the brand's first electric vehicle to use its flexible architecture that can underpin combustion engine, plug-in hybrid and battery-powered vehicles.
The iX3, which will compete with models such as the Jaguar I-Pace and Tesla Model Y, will debut in China later this year and in Europe in early 2021 and previews an offensive by the automaker that will include two more models next year, the i4 sedan and the larger iNEXT crossover.
Northvolt raised $1 billion last year from investors including Volkswagen Group, Goldman Sachs and BMW to build the battery-cell factory in northern Sweden.
VW plans to spend about 1.35 billion euros ($1.5 billion) to erect a joint factory with the supplier in Salzgitter, Germany.