The Volkswagen Group and China's Ganfeng Lithium have signed a memorandum of understanding on long-term lithium supplies for battery cells.
Ganfeng will supply lithium to the VW group and its suppliers for the next decade.
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VW aid the deal secured "a significant share of its lithium requirement for batteries".
Stefan Sommer, the group's head of components and procurement, said: "Over the next 10 years the 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."
Global lithium demand is expected to more than double by 2023.
VW's e-mobility purchasing chief Michael Baecker said: "We are creating a secure basis for planning capacities and costs. The strategic collaboration is the result of an extensive market analysis executed by [our] e-raw material team focused on building close relationships with the raw material industry.
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By GlobalData"We consider a sustainable value chain as equally important to securing material capacities and competitive pricing structures."
VW and Ganfeng also agreed to cooperate on battery recycling and solid state batteries.
