Volkswagen China plans to set up a joint venture with Huayou Cobalt and Qingshan Group to lay out the battery raw material supply chain.

On March 21, Volkswagen Group (China) signed two memorandums of understanding on strategic cooperation with Huayou Cobalt and Qingshan Group to further consolidate its position in the domestic battery value chain and enhance its competitiveness in the fast-growing field of electric travel. The purpose of this cooperation is to achieve cost advantages, ensure the supply of raw materials, achieve a transparent and sustainable supply chain, and strengthen the coordination of technological innovation in the whole industry chain, including precursors and cathode materials.

Cathode material is the main component of lithium-ion battery, which not only determines the energy density of battery, but also accounts for most of the cost of power battery. This cooperation will help to achieve the group's long-term goal of reducing battery costs by 30% and 50%, while continuously improving key performance such as power battery energy density through technical collaboration.

Volkswagen Group (China) will form an upstream joint venture with Huayou Cobalt and Qingshan Group focusing on the production of nickel and cobalt raw materials. It also plans to establish a downstream joint venture with Huayou cobalt specializing in nickel and cobalt sulfate refining, precursor processing and cathode material production to support Volkswagen's ambitious new energy vehicle growth strategy in the Chinese market.

Set up an upstream joint venture with Huayou Cobalt and Qingshan Group in Indonesia

Indonesia has more than 10% of the world's laterite nickel reserves. Volkswagen, Huayou Cobalt Industry and Castle Peak Group plan to set up a joint venture in Indonesia, where the three parties will invest their respective advantages in the production of battery raw materials. It is expected that after full production, the total raw material production capacity of the joint venture will be able to meet the supply of nickel and cobalt raw materials for 160GWh batteries.

Set up a downstream joint venture with Huayou Cobalt Industry in Guangxi, China

Volkswagen also plans to set up a joint venture with Huayou Cobalt to specialize in nickel and cobalt sulfate refining, precursor processing and cathode material production. Huayou will use its integrated production process to help Volkswagen further optimize battery costs while reducing carbon emissions in the supply chain of new energy vehicles in China.