Volkswagen Group China has signed two Memorandums of Understanding (MOU) to set up joint ventures (JV) in a bid to reduce the cost of its lithium-ion batteries by 30-50%.
The MoUs with cobalt supplier Huayou Cobalt and steel company Tsingshan Group will cover the upstream and downstream of the lithium-ion cathode supply chain.
The partnerships will develop projects to improve cost efficiency and secure a sustainable battery raw materials supply chain for China’s new energy vehicle (NEV) growth.
The partnerships intend to form an upstream JV focusing on nickel and cobalt raw material production.
In parallel, Volkswagen Group China and Huayou plan to establish a downstream JV specialising in refining nickel and cobalt sulfates, as well as precursor processing and the production of cathode materials.
Volkswagen Group China— a division of Volkswagen Group— hopes the strategic partnerships will strengthen its position in the country’s battery value chain and the group’s competitiveness in China.
Lithium-ion cathode materials determine the energy density of a cell and account for a large share of the battery cell costs.
Indonesia joint venture
Volkswagen, Huayou and Tsingshan intend to form a JV in Indonesia, where more than 10% of the world’s laterite nickel ore reserves are located.
The partners agreed to jointly invest their respective advantages and resources for battery raw materials production.
Volkswagen also plans to establish a JV with Huayou for the refining of nickel and cobalt sulfates, precursor and cathode material production.
Huayou will utilise its integrated production process to support Volkswagen to further optimise the battery cost and to further reduce CO2 emissions in the company’s Chinese supply chain of new energy vehicles (NEVs).
