Volkswagen Inks Joint Ventures For China EV Battery Supplies

Volkswagen to establish joint ventures with China’s Huayou Cobalt and Tsingshan Group for nickel and cobalt as raw material prices soar

Volkswagen has said it will establish joint ventures with China’s Huayou Cobalt and Tsingshan Group as it seeks to gain direct access to nickel and cobalt supplies for electric vehicles in China, the world’s biggest car market.

The move comes at a time of spiralling raw material prices since Russia’s invasion of Ukraine in February.

Volkswagen is spending 30 billion euros (£25bn) to build a network of battery cell factories as it pushes into the growing electric vehicle market.

It said it has signed a memorandum of understanding with Huayou and Tsingshan for a joint venture in Indonesia, the location of 10 percent of the world’s laterite nickel ore reserves.

Image credit: Volkswagen
Image credit: Volkswagen

Raw materials

The venture is to focus on nickel and cobalt raw material production, providing supplies for up to 160 gigawatt hours’ worth of batteries.

That corresponds to an annual output of up to around 120,000 tonnes of nickel and 15,000 tonnes of cobalt, Huayou said in a filing to the Shanghai Stock Exchange.

A second joint venture with Huayou in China’s southwestern Guanxi region is to refine nickel and cobalt sulfates and to produce cathode materials.

The venture aims to achieve “significant cost advantages” while setting up a sustainable supply chain, Volkswagen said.

“The two partnerships target to contribute to the Group’s long term target of a 30 percent to 50 percent cost reduction on each battery,” it said.

Supply chain

Ford last week announced plans for a nickel cell joint venture in Turkey as it builds its own EV battery supply chain.

Carmakers including Tesla and China’s BYD have raised prices for electric vehicles due to raw material costs.

Volkswagen on Monday also announced a significant over-the-air software update for its electric ID range of cars.

The “software facelift”, set to arrive in April, improves driver assistance systems and voice control and implements slightly faster charging for some vehicles, VW said.