Volkswagen Group secures lithium supplies for 10-year period

by Autocar Pro News Desk , 06 Apr 2019

The Volkswagen Group and China's Ganfeng Lithium Co, the world’s leading lithium compounds and metal manufacturer, have signed a memorandum of understanding on long-term lithium supplies for battery cells. Under the agreement, Ganfeng will supply lithium to the Volkswagen Group and its suppliers for the next ten years. Volkswagen is thus already securing a significant share of its lithium requirement for batteries.

Dr. Stefan Sommer, Group Board Member for Components and Procurement at Volkswagen Aktiengesellschaft, said: “Over the next 10 years, the Volkswagen Group will be launching 70- plus new pure electric vehicles. That means approximately a quarter of the vehicles we deliver in 2025 will be powered by electricity. Consequently, there will be a rapid increase in our raw material demand for cell production in the coming years. We must make sure we cover this demand at an early stage. Long-term agreements like the one for lithium, a key raw material, that we have just concluded with Ganfeng are therefore of crucial strategic significance for implementing our electric offensive.”

The rapid increase in vehicle electrification in the automotive industry will have a major impact on global raw material markets. The global lithium demand is expected to more than double by 2023. In light of this, the agreement with Ganfeng is an important milestone in supply security for the Volkswagen Group.

Michael Bäcker, Head of Corporate Purchasing e-Mobility at Volkswagen Aktiengesellschaft, added: “With Ganfeng as a strategic partner, we are creating a secure basis for planning capacities and costs. The strategic collaboration is the result of an extensive market analysis executed by Volkswagen’s e-Raw Material Team. This specialised team is focusing on building close relationships with the raw material industry. Together with selected strategic partners, Volkswagen is identifying and establishing common synergies along the HV-battery value chain. During this process we consider a sustainable value chain as equally important to securing material capacities and competitive pricing structures.”

In addition to the arrangements on lithium supplies, Volkswagen and Ganfeng also agreed to cooperate on future topics such as battery recycling and solid-state batteries.

Ganfeng Lithium Co offers five major categories of more than 40 lithium compounds and metals products.

This clearly is a smart move by the Volkswagen Group to ensure a continuous supply of lithium for its EV programme. It's something the Indian government as well as Indian EV industry would do well to emulate. 

Also read: VW's MEB electric car platform: full details revealed

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