The German car manufacturer BMW Group is betting on efficient design and recycling to bring down battery costs and is steering clear of investing in mines, its finance chief said on Friday, according to Reuters press agency, setting it apart from some competitors digging deep into the supply chain.

“We don’t think it is right to invest in mines,” said CFO Nicolas Peter (due to retire in May). “We view it as more important to reclaim raw materials from cars and other products,” he added. BMW has its own battery cell research center in Germany but has left large-scale development to partners, placing multibillion-euro orders with Chinese battery giant CATL and EVE Energy to produce battery cells in China and Europe.

Battery costs

Bringing down battery costs, primarily from raw materials, is the key challenge for carmakers attempting to generate profits from electric vehicles equivalent to those realized from combustion engine cars (ICE), a target BMW hopes to reach with its ‘Neue Klasse‘  launching in 2025.

Some, such as Volkswagen, are betting on expanding their battery production and investing in mines to secure control down the supply chain. Mercedes-Benz said last week it had made a “fundamental decision” to allocate capital to mining. It has set up a raw material office in Canada, where it signed a raw materials agreement last year.

BMW is taking a different approach, focusing on creating demand via car production and relying on partners with more expertise to build the large-scale infrastructure required for electrification.

Recycling

Peter said although BMW believes in recycling over mining as a way to reap critical minerals and has a battery cell recycling facility via its joint venture in China, it does not see the need to develop extensive cell recycling facilities of its own.

Instead, he said it would prove demand for recycled raw materials via the sales growth of its electric cars and work with partners to recycle at scale. “With our business development, we are creating the motivation to invest, but we do not need to develop big recycling facilities for battery cells ourselves,” Peter added. One of these partners could be the Belgian recycling specialist Umicore.

Hydrogen

Investing in technologies requiring fewer critical raw minerals, including hydrogen-powered cars, is another way BMW plans to bring down costs.

The company is the only major German carmaker working on a hydrogen-powered passenger vehicle. Chief Executive Officer Oliver Zipse said he could imagine going into commercial production in the second half of the decade if other industries, like trucks, help provide a hydrogen charging network.

Lately, BMW has launched a limited number of iX5 Hydrogen SUVs to be handed to selected customers who are supposed to give feedback on using such vehicles, given a possible larger-scale production of a dedicated hydrogen BMW in the second half of this decade.