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BMW, Carbon Motors ink $1.35B supply contract

March 22, 2010

Bayerische Motoren Werke AG, better known as BMW, has won a contract from Indiana-based Carbon Motors Corp. worth more than $1.35 billion to supply engines for U.S. police cars.

BMW, the world’s largest maker of luxury vehicles, will supply more than 240,000 six-cylinder diesel engines, cooling systems, exhausts and automatic transmissions to Carbon Motors, the Munich-based company said in a statement Monday.

The contract is the largest since BMW announced plans to step up engine sales to other companies in 2007. The owner of the Mini and Rolls-Royce brands currently supplies engines for boats and exotic car manufacturer Wiesmann GmbH in Duelmen, Germany, and is seeking to boost revenue after profit fell to a 10-year low in 2009 because of a loss at the auto division.

Carbon Motors, established in 2003, is developing the E7, billed as the first vehicle designed exclusively for U.S. police authorities. The company, seeking to capitalize on President Barack Obama’s efforts to reduce law-enforcement costs and curb emissions, is applying for a $310 million loan from the U.S. Department of Energy. Tom Ridge, the former U.S. Homeland Security secretary, serves on its board.

The company announced last year that it had selected the Fayette County community of Connersville in mideastern Indiana to manufacture its police cruiser in a 1.8-million-square-foot facility formerly occupied by Visteon Corp. The company said it could ultimately employ more than 1,500 workers.

The agreement “marks an important milestone” in BMW’s powertrain strategy and more deals will follow, Ian Robertson, the German carmaker’s head of sales, said in the statement.

“Efficient BMW diesel engines will benefit not only the environment, but -- thanks to the fleet’s lower running costs -- also the American taxpayer,” Carbon Motors Chief Executive Officer William Santana Li said in the statement.

BMW declined to comment on the timeframe for deliveries. Carbon Motors wasn’t immediately available for comment.

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