BMW to spend billions in Korea next year

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BMW to spend billions in Korea next year


Andreas Wendt, a member of the board of management at BMW AG in charge of purchasing and supplier network, speaks during the BMW Group Supplier Day Korea 2019 held Thursday in Incheon. [BMW GROUP KOREA]

BMW Group expects to spend over 2 billion euros ($2.22 billion) on Korean parts by the end of next year, the Korean unit of the German auto giant said during a meeting with its local suppliers held Thursday in Incheon.

The automaker also announced Thursday it inked a 2.9 billion euro battery supply deal with local battery maker Samsung SDI, one of 30 first-tier suppliers from Korea that BMW has been working with.

The announcement came as the German auto group held its Supplier Day event, a long-established practice by BMW to share future partnership plans with local suppliers, for the first time in Korea. The Korean subsidiary of BMW Group said the event was held to recognize the growing importance of Korean suppliers to the group.

The auto group’s purchasing volume with Korean suppliers has been constantly growing, from 70 million euros in 2012 to 500 million euros in 2016 and 1.5 billion euros last year.

“As one of our most important markets, Korea plays a key role in the performance of the BMW Group and across numerous aspects of the business,” said Andreas Wendt, a member of the board of management of BMW AG in charge of purchasing and supplier network during the Thursday event. “We highly value your contribution, especially when it comes to e-mobility, automated driving and connectivity.”

While BMW Group plans to have 25 electric models in its portfolio by 2023, with more than half of those being fully electric cars, Wendt said it is crucial that the group secures enough battery cells to achieve the goal.

“Battery is a key component in every electric vehicle [as] it significantly determines not only the range, but also the performance capabilities of the car,” said Wendt. “That is why I am very happy to say that yesterday we signed a long-term supply contract with Samsung SDI on our fifth generation of battery cells.”

According to BMW Group, Samsung SDI will be offering fifth-generation battery cells to BMW from 2021 to 2031 under the deal.

“We source the best-available future-oriented battery expertise and technology from our Korean suppliers,” he added.

BMW Group is also working in the field of 5G connectivity with two Korean companies, according to Wendt. Korea was the first country in the world to commercialize a 5G network for mobile phones earlier this year.

“We are expanding our network in companies of all sizes - also including more and more small and medium enterprises and start-ups,” Wendt said. “Altogether, we have identified more than 25 Korean start-ups with potentially interesting, forward-looking technologies for the BMW Group.”

The German automaker is already working with Korean start-ups in the field of autonomous driving and intelligent self-cleaning glass, the company said. Self-cleaning glass can be used in sensor cleaning systems for cameras.

BMW Group has been working with Korean companies to promote sustainable business practices. The group has set up a pilot project at a subsistence mine in the Democratic Republic of Congo and brought BASF, Samsung SDI and Samsung Electronics on board as partners.

The partners are jointly funding the project, dubbed Cobalt for Development, which officially launched in the Congo in September. While cobalt, a key material used to make electric car batteries, is mostly mined in the Congo, child labor and bad working conditions there have been cited as a major concern.

The relationship between BMW Group and Korea goes back roughly 25 years. Next year will mark 25 years since BMW established it local subsidiary in Korea. It was the first foreign car company to do so.

Currently, seven dealer groups with 72 showrooms and 82 service centers represent BMW Group’s presence across the country.

“The BMW Group recognizes Korea is one of the world’s powerhouses of high-end technology,” Wendt said. “As innovation is more important than ever, we will intensify our cooperation with Korean companies to leverage the expertise and talent here.”

Globally, BMW Group has some 12,000 suppliers and 4,500 production locations.

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