Volkswagen forms joint ventures to secure cobalt, nickel for EV batteries
Volkswagen announced it will partner with Huayou Cobalt and Tsingshan Group to secure nickel and cobalt supplies in China in an effort to control battery prices as raw materials observe a surge in prices. According to a report by Reuters, Volkswagen and the two companies have signed a memorandum of understanding (MoU) in Indonesia for the joint ventures. These companies will jointly invest in resources to acquire raw materials for the production of batteries for electric vehicles, said Volkswagen in a statement.
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Volkswagen's partnership with Huayou in China's southwestern Guangxi region will majorly focus on the refining of nickel and cobalt sulfates, precursor and cathode material production. “The cooperation aims to achieve significant cost advantages, secure the raw material supply and achieve a transparent and sustainable supply chain," said the auto major. The two ventures aim to contribute to the automaker's long term target of a 30 to 50 per cent cost reduction on each battery.
The global nickel prices have registered a massive increase of almost 400 per cent following the beginning of the Russia-Ukraine war as Russia is a key supplier of the metal. Volkswagen informed more than 10 per cent of the world's laterite nickel ore reserves are in Indonesia. The report also added prices on the London Metal Exchange doubled to $100,000 per tonne after Tsingshan bought large amounts of nickel to secure supply and its exposure to costly margin calls.
Volkswagen is pushing its electrification goals under all its brands and wants to take on Tesla in the electric vehicle segment. It has invested 35 billion Euros to shift towards EVs and wants to establish itself as the world's largest electric vehicle maker by 2025.