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Volkswagen’s Partnerships In Asia Aimed To Secure EV Battery Raw Materials Supply

Volkswagen’s Partnerships In Asia Aimed To Secure EV Battery Raw Materials Supply
Volkswagen is forming joint ventures with Huayou Cobalt and Tsingshan Group to ensure nickel and cobalt supply for electric vehicles in China, the world's largest automobile market, and to save costs at a time when raw material prices are rising.
The plan is part of a 30-billion-euro ($33-billion) campaign by the world's second-largest automaker to establish a network of battery cell manufacturers and have more straightforward access to the raw materials required to supply them. find out more
Volkswagen, Huayou Cobalt, and Tsingshan have signed a memorandum of understanding for setting up of a joint venture that will be focused on production of nickel and cobalt raw materials in Indonesia, where more than 10 peer cent of the laterite nickel ore reserves in the world are situated.
Volkswagen China Group said in a statement that during the venture's final expansion stage, it will be in a position to supply raw materials enough for production of 160 gigawatt hours of batteries for electric vehicles.
Huayou claimed in a separate filing to the Shanghai Stock Exchange that this translates to an annual output of roughly 120,000 tonnes of nickel and 15,000 tonnes of cobalt.
Volkswagen will launch a second joint venture with Huayou in China's southwestern Guangxi region to refine nickel and cobalt sulphates, as well as produce precursor and cathode materials, according to the company.
"The cooperation aims to achieve significant cost advantages, secure the raw material supply and achieve a transparent and sustainable supply chain," it said. "The two partnerships target to contribute to the Group's long term target of a 30-50% cost reduction on each battery."
Due to the invasion of Ukraine by Russia and the consequent imposition of a slew of severe sanctions on Russia by Western countries including the United States and the European Union, global nickel prices have risen by about 400 per cent so far this year. This has added on to the issues of the market which was already hot.
Tsingshan acquired massive amounts of nickel to decrease its short bets on the commodity and its exposure to costly margin calls, and prices on the London Metal Exchange doubled to $100,000 per tonne in a matter of hours on March 8. find out more
However, once the LME was forced to cease trading for a period and reopen with new trading limits, prices have plummeted.
Tsingshan, a privately held company, has risen to become the world's top nickel producer thanks to the development of a low-cost nickel production technology. It has a number of significant investments in Indonesia, including joint ventures with Huayou.
Volkswagen's decision comes as rivals such as Tesla and BYD are hiking EV prices due to rising raw material costs, and it follows Ford's revelation last week that it aims to form a nickel cell joint venture in Turkey. find out more
On Saturday, Li Xiang, the CEO of Chinese EV maker Li Auto, remarked on his official Weibo account that battery makers had risen prices at a "outrageous" rate in the second quarter, and warned that those EV makers who had not yet raised pricing would certainly have to do so.
When asked about Li's remarks, CATL, a Chinese battery manufacturer that supplies major automakers like as Tesla, told Reuters on Monday that it had hiked prices for some battery products owing to rising raw material costs.

Christopher J. Mitchell

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