German carmaker Volkswagen on Friday announced that the company has sealed a 10-year agreement with a Chinese firm Ganfeng to supply lithium that the company will utilize in manufacturing batteries for electric vehicles.
The two firms have signed memorandum of understanding for long-term lithium supplies, VW said in a statement without disclosing the financial terms of the deal.
“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,” the statement added.
In line with stringent EU emission norms, the automaker also revealed its plan to launch 70-plus new pure electric vehicles by 2028. It also claimed that by 2025 a quarter of cars sold by the company will be powered by electricity. This deal will ensure in establishing a sustainable supply chain of lithium, a key raw-material used in manufacturing of electric vehicle batteries.
“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,” said Stefan Sommer, Group Board Member for Components and Procurement at Volkswagen Aktiengesellschaft underlining the neccesity of signing a long-term deal.
Beyond the arrangements on lithium supplies, Volkswagen and Ganfeng have also agreed to cooperate on future topics such as battery recycling and solid-state batteries.
