The new facility will supply electric vehicles produced at the nearby Spartanburg factory.
The BMW Group took a big step towards accelerating its supply chains in its North American electric vehicle (EV) branch on Tuesday. The German carmaker broke grounds for a new battery plant in South Carolina. As the company announced, the BMW Group Plant Woodruff will produce sixth-generation batteries to supply the EV production in its nearby facility in Spartanburg which operates since 1994.
The new plant is part of BMW’s announcement to invest $1.7 billion to produce EVs in North America in October last year. The new plant in Woodruff costs the company $700 million, while the remaining $1 billion are allocated to preparing the Spartanburg facility for EV production. BMW’s announcement came after President Joe Biden signed the Inflation Reduction Act (IRA) last summer. Under the IRA, EVs bought in the US qualify for a tax credit of up to $7,500. The catch is that purchased cars only qualify for the first $3,750 if at least 50 percent of a vehicle’s battery components were produced or assembled in North America. For the other $3,750, at least 40 percent of critical minerals used in the battery must be extracted or processed in the U.S. or in a country that is a U.S. free-trade agreement partner, or they must have been made from materials recycled in North America. BMW’s new value chain will make its EV branch eligible for the tax credits under the IRA and could thus boost sales in North America.
A similar announcement was made earlier this year by fellow German carmaker VW, unveiling Canada as its first overseas battery production facility. The production of batteries in Canada would also qualify VW’s EVs built there for the tax credits under the IRA.