Samsung SDI Co., one of South Korea’s top three battery making companies, has signed a 10-year contract with Germany’s BMW Group to supply 2.9 billion euro ($3.2 billion) worth lithium-ion battery cells for the car maker that has vowed to release 25 new green car models by 2025.

BMW Group Korea said on Thursday that it signed a long-term business agreement with Samsung SDI on Wednesday to purchase fifth-generation battery cells from the battery making unit of Korea’s Samsung Group. Under the contract, BMW Group will buy 2.9 billion euro worth battery cells from Samsung SDI from 2021 to 2031.

The Korean battery maker’s fifth-generation EV batteries are expected to power some of the new 25 environment-friendly vehicles models including 12 pure electric cars that the German luxury car brand recently pledged to roll out by 2025.

The latest battery supply deal between the two companies is an extension of their partnership in the development of battery-powered vehicles that first began 10 years ago. BMW and Samsung SDI first joined hands to develop electric vehicles in 2009.

In 2014, Samsung SDI was selected as the exclusive battery supplier for BMW’s electric car model i3, and the battery cell used in the i3 delivers 60 Amp hour (Ah) capacity, the highest at the time.

In the same year, they signed a new business agreement to establish mid- and long-term partnership. Under the partnership, the two companies have been not only developing next-generation materials and electric vehicle technology but also cooperating on various global projects.

The long-term contract with BMW is expected to further enhance Samsung SDI’s position in the global EV battery market. As a relatively latecomer in the market, it has been accelerating the process to shift its business focus from small batteries for mobile and information technology devices to electric vehicle batteries to catch up its bigger rivals.

As part of efforts to expand its EV battery business, Samsung SDI built global battery manufacturing bases in Xian, China, in 2015, and Hungary in 2017 after it embarked on the mass production of lithium-ion battery for electric cars in its Korean plant in Ulsan in 2013.

Last year, Samsung SDI invested 1.8 trillion won in lithium-ion battery sector to take lead in the bourgeoning industry. According to market research agency BNEF, electric vehicles are projected to account for 90 percent in the entire automotive market in 2050, up from 4.3 percent in 2018 and about 50 percent in 2038.

Currently, Samsung SDI also supplies its batteries to other global automakers including Volkswagen, Jaguar, and Fiat Chrysler.

Earlier this year, the Korean company grabbed global attention after it unveiled next-generation battery cells at Detroit Motor Show including those with a driving range of 600 kilometers per single charge.

By Kang Gye-man, Chun Gyung-woon, and Lee Eun-joo

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