BMW has been making a lot of noise about its forthcoming Neue Klasse (new class) models recently. The abridged version is that BMW is entering a new era with a host of cars under the Neue Klasse banner. According to Bimmer, it's only the second time in its 100-year-plus history that it's completely reinventing itself.

Neue Klasse vehicles will include ICE, hydrogen, and EV models, and we'll get our first glimpse of a new model in 2023. While discussing the upcoming revolution, BMW's boss, Oliver Zipse, stated that it wants to hit two million EV vehicle sales by 2025.

One has to wonder where all those batteries will come from, but it now seems we have an answer.

According to Reuters, BMW recently signed an agreement with China's EVE Energy. BMW has an existing relationship with EVE but also sources batteries from Samsung, SDI, CATL, and Northvolt.

Last year BMW announced that it would be investing $24 million in batteries, and EVE Energy was named as one of the primary recipients of said investment. But, as mentioned earlier, BMW has its fingers in several electric pies. It's also closely connected to Solid Power, a US-based company developing solid-state battery technology.

We expected the solid-state tech to debut in Neue Klasse models, but it seems this revolutionary battery technology is still a few years away from production reality.

While it's unclear what will happen to the deals BMW has with all of the battery suppliers mentioned above, a source with direct knowledge of the matter revealed that EVE would be the German brand's primary battery supplier for its next-generation vehicles.

BMW chose EVE because it developed a new large-format cylindrical battery, similar to Tesla's 4680 units. According to the source, the EVE batteries will be similar in size. Tesla's batteries are built by Panasonic, which recently announced it would be building the world's largest EV battery plant in Kansas. This means Tesla will likely benefit the most from the new Inflation Reduction Bill, which aims to reduce manufacturers' reliance on Chinese-made batteries. BMW buyers, however, won't.

This new deal will be beneficial for BMW and EVE. CATL is currently the largest supplier of batteries in China. It holds a 48% market share compared to EVE's 2.3%. To meet demand, EVE announced it would build a cylindrical battery production plant in Hungary. Recent filings also show that it's planning another plant in central China.

The first Neue Klasse BMW will likely be a compact sedan in the 3 Series segment, but don't worry if you're not ready to commit to EV just yet. BMW will continue to build an ICE 3 Series on the existing CLAR platform, as it firmly believes there is room for both ICE and EV vehicles in the future.