Volkswagen Group and China’s leading electric vehicle (EV) battery manufacturer Contemporary Amperex Technology Company Limited (CATL) have agreed to strengthen their collaboration in the areas of battery research and development (R&D), new materials applications and component development.

Through its Volkswagen Group China unit, the German automaker at the end of last week said it aims to work with CATL “to jointly develop cost-competitive battery products.” In the future the two companies will also look to collaborate in battery recycling, swapping, V2G (vehicle-to-grid) solutions, carbon emissions reduction and raw material supply transparency, as Volkswagen looks to accelerate its transition to electrified vehicles globally.

Volkswagen also confirmed that its local Chinese joint ventures, including SAIC Volkswagen, FAW Volkswagen and Volkswagen Anhui, have also signed individual long-term battery sourcing agreements with CATL to strengthen their partnerships.

Volkswagen’s sales in China fell by 9.5% to 2.93 million vehicles last year, as the automaker struggled to keep up with local automakers in the market’s rapid transition to new energy vehicles. It is looking to co-develop and source cost-competitive batteries from CATL to help it reverse this decline.