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Volkswagen announces JV plan to secure battery materials supply
Updated 22:54, 21-Mar-2022
By Yang Jing
A Volkswagen badge on the front of a Volkswagen ID.5 GTX all-electric automobile during the world unveiling at the Volkswagen AG auto plant in Dresden, Germany, Nov. 3, 2021./CFP

A Volkswagen badge on the front of a Volkswagen ID.5 GTX all-electric automobile during the world unveiling at the Volkswagen AG auto plant in Dresden, Germany, Nov. 3, 2021./CFP

Volkswagen Group China has unveiled a plan to set up two joint ventures with Huayou Cobalt and Tsingshan Group to secure raw materials required for manufacturing batteries for electric vehicles.

The two joint ventures are aimed at covering upstream and downstream of the cathode supply chain to support Volkswagen's ambition of new energy vehicles growth in the world's largest automobile market, according to a press release Volkswagen posted on its website Monday.

Volkswagen signed a memorandum of understanding with Huayou and Tsingshan to form a joint venture in Indonesia, where more than 10 percent of the world's laterite nickel ore reserves are located to produce battery raw materials.

At the final expansion stage, the total production capacity is equal to the supply of 160 GWh battery's demand for nickel and cobalt raw materials. 

Huayou said in a separate filing to Shanghai Stock Exchange on Monday that the joint venture will have an annual output of about 120,000 tonnes of nickel and 15,000 tons of cobalt.

Huayou, founded in 2002, specializes in new energy Li-ion battery materials and new cobalt materials.

Volkswagen also plans to establish a joint venture with Huayou in south China's Guangxi Zhuang Autonomous Region to refine nickel and cobalt sulfates, precursors, and cathode material production.

"The two partnerships target to contribute to the Group's long-term target of a 30-50 percent cost reduction on each battery," said Volkswagen in the statement.

Global nickel prices have surged due to the Russia-Ukraine crisis as Russia is a major supplier.

On March 8, nickel prices on the London Metal Exchange (LME) even more than doubled to $100,000 per tonne as Tsingsha, one of the world's largest stainless and primary nickel producers, bought large amounts to reduce its short bets on the metal. LME had to halt the trading and later reopened with new trading limits.

Volkswagen's move comes as rivals are responding to the surging raw materials costs in different ways.

Tesla has hiked prices again in China on March 15, the third price rise in just one week. Chinese EV maker BYD has also raised prices twice this year. 

On March 14, Ford also announced a plan to build an EV battery plant in Turkey with South Korean battery maker SK On and its Turkish joint venture partner, Koc Holding. 
 

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