Two people with knowledge of the matter said that BMW will be supplied with large cylindrical batteries for its electric cars in Europe, as the German automaker follows Tesla Inc in adopting the new technology.
This year, Tesla began manufacturing its new larger-format 4680 cylindrical battery - denoted 46 millimeters in diameter and 80 millimeters in length. It expects the battery to reduce production costs and improve range compared to the current-generation 2170 cylindrical battery.
Guangdong-based EVE's batteries will be similar in size, the sources said, who were not authorized to speak to media and declined to be identified.
EVE plans to build a large cylindrical battery plant in central China, according to company filings.
EVE, a supplier of BMW in China, didn't respond to a request for comment. BMW plans to release some battery related news in early September, but it didn't say anything.
The move by BMW, which currently uses prismatic batteries, underscores the growing momentum for larger-format cylindrical batteries. Prismatic batteries, which are rectangular in shape, have become the most common form of auto battery in the past two years because they can be more densely packed, saving on costs. The newer larger format cells have become more cost-effective due to improvements in energy density, according to proponents of cylindrical batteries.
China's CATL, the world's largest battery maker, is due to supply cylindrical batteries to BMW from 2025.
Expectations are high that these batteries will also be large-sized cells. CATL didn't respond to a request for comment on planned dimensions.
It wasn't immediately clear how many batteries BMW plans to purchase from EVE and CATL.
The deal with BMW caused the Chinese company to announce in March that it would build a cylindrical battery production facility in Debrecen, Hungary - its first plant in Europe, according to a person with direct knowledge of the deal.
BMW is planning to build a plant in the same city, where it plans to produce EVs developed on its Neue Klasse platform. Government incentives are driving demand for EVs in Europe and the United States, spurring Chinese battery and EV makers to set up production bases overseas.
CATL announced last week that it would build Europe's biggest battery plant with an annual capacity of 100 gigawatt hours, also in Debrecen, to supply European automakers. Mercedes-Benz will be its largest client.
With the new battery demand likely to be for large cylindrical cells, Chinese battery makers, which have relied on a huge domestic market where prismatic cells reign, will have to change tack like EVE and CATL, said Duan Bing, an analyst at Nomura.
Eve, founded in 2001 by lithium-ion battery researcher Liu Jincheng and a supplier to Xpeng Inc., is a much smaller player than CATL. According to the China Automotive Battery Innovation Alliance, it ranks eighth in China with a 2.3% market share.
In China, CATL makes 47.6% of the total batteries installed in EVs.