Volkswagen ink MoU with Huayou Cobalt, Tsingshan Group to address runaway costs of EV batteries
Volkswagen has announced that it will form joint ventures with Huayou Cobalt and Tsingshan Group to secure nickel and cobalt supplies for electric vehicles in China and to reduce costs at a time of surging raw material prices.
The move is part of a 30-billion-euro ($33 billion) push by the world's second-largest carmaker to build a network of battery cell factories and secure more direct access to vital raw materials that are needed to supply them.
Volkswagen, Huayou Cobalt, and Tsingshan have signed a Memorandum of Understanding (MoU) for a joint venture in Indonesia, where more than 10 percent of the world's laterite nickel ore reserves are located, to focus on nickel and cobalt raw material production.
At the final expansion stage of the venture, it will be able to supply raw materials for 160-gigawatt hours' worth of electric vehicle batteries, Volkswagen China Group said in a statement.
Volkswagen's second joint venture will be formed with Huayou in China's southwestern Guangxi region for the refining of nickel and cobalt sulfates, precursor and cathode material production, it said.
"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 percent cost reduction on each battery."