BMW Bets Big On EVs, Signs 10B-Euro Battery Deal With CATL

BMW AG BAMXF recently announced a deal with Chinese battery manufacturers Contemporary Amperex Technology Co. Limited (“CATL”) and Samsung (KS:005930) SDI. BMW is set to spend more than €10 billion euros ($11.07 billion) on battery cells, taking a major step toward the electric vehicle (EV) revolution.

Post the deal, BMW’s original order volume of 4 billion euros with CATL will be increased to 7.3 billion euros (contract duration from 2020-2031). Under the contract, 4.5 billion euros will be dispensed to the BMW Group and the rest 2.8 billion euros will be assigned to the Chinese production site of the BMW Brilliance Automotive Ltd. (BBA) joint venture.

BMW has also entered a supply contract with Samsung SDI for its fifth-generation electric drivetrains. The contract, extending from 2021 to 2031, is worth 2.9 billion euros ($3.21 billion) and will help BMW meet its long-term battery cell needs.

Additionally, the company looks forward to double its EV sales between 2019 and 2021. It aims to have more than half a million fully-electric or plug-in hybrid drive trains on the roads by 2019-end. In 2020, BMW plans to launch the fully-electric BMW iX3 and by 2021, it intends to unveil the BMW iNEXT and BMW i4.

With the growing popularity of greener vehicles, the firm expects its worldwide EV sales to increase more than 30% each year. BMW targets to have 25 electrified models in its line-up by 2023. It will create flexible vehicle architecture to offer fully-electric vehicles, plug-in hybrids and models with combustion engines, allowing the company to adapt to the ever-changing market conditions.

Zacks Rank & Other Stocks to Consider

Currently, BMW carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the Auto-Tires-Trucks sector are BRP Inc. (NASDAQ:DOOO) , Spartan Motors, Inc. (NASDAQ:SPAR) and SPX Corporation (NYSE:SPXC) . While BRP carries a Zacks Rank #1 (Strong Buy), Spartan Motors and SPX carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BRP has a projected earnings growth rate of 18.9% for the current year. Its shares have gained around 39.1% over the past year.

Spartan Motors has an estimated earnings growth rate of 85.42% for the ongoing year. The company’s shares have surged 112.2% in a year’s time.

SPX has an expected earnings growth rate of 23.2% for 2019. The company’s shares have appreciated 60.5% in the past year.

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