Volkswagen has signed a letter of intent with Ganfeng Lithium for the long-term supply of lithium for battery cells. It is planned that Ganfeng will supply the Wolfsburg-based company and its suppliers with lithium for the next ten years.
This will be followed by Volkswagen, as Ganfeng already signed supply agreements with Tesla, LG Chem and BMW in 2018. The Bavarians, for example, have a five-year contract signed at the end of September 2018, which offers the prospect of an option to extend it for a further three years. In view of the rapid increase in vehicle electrification throughout the industry, the aim of all OEMs is to create a degree of security of supply.
According to Dr. Stefan Sommer, Group Board Member for Components and Procurement, the future demand for lithium must be secured at an early stage: “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”.
In addition to their main focus on lithium supplies, Volkswagen and Ganfeng also want to work together on future topics such as battery recycling and solid batteries. Ganfeng is a Chinese manufacturer of lithium products has been listed on the Chinese stock exchange since 2010, and in Hong Kong since 2018.
Volkswagen has now set up a dedicated unit – the so-called e-Raw Material Team – to help build relationships with companies in the raw materials industry. According to Volkswagen, the strategic cooperation with Ganfeng is the result of this team’s intensive analysis of the markets.