VW Group secures 10-year lithium supply deal for future EVs

Volkswagen Group has agreed a 10-year lithium supply deal with Chinese manufacturer Ganfeng Lithium Co.

Under the agreement, Ganfeng will supply a “significant” share of the lithium required for the car maker’s upcoming range of electric vehicles (EVs).

Over the next ten years the Volkswagen Group plans to launch more than 70 new pure electric vehicles. It expects that a quarter of the vehicles it sells in 2025 will be electric.

Dr. Stefan Sommer, group board member for Components and Procurement at Volkswagen Aktiengesellschaft, said: “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.”

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.

European carmakers are working hard to bring battery supply closer to home. Germany has earmarked €1 billion (£860 million) to support a consortium looking to produce EV battery cells. There are also plans to fund a research facility to develop next-generation solid-state batteries. More than 30 companies have applied, including BMW and the Volkswagen Group.

Volkswagen will start taking reservations for its first ID model – the manufacturer’s new family of electric cars – in May, almost six months before the car is unveiled at autumn’s Frankfurt Motor Show.

The hatchback will start from less than €30,000 (£25,700) and it will have a range of up to 342 miles.

However, the manufacturer’s board member for sales, Jurgen Stackman admitted: “Given the interest in the ID family shown by our dealers, I think it is possible the launch edition will already have sold out before we unveil it in September.”

In addition to the arrangements on lithium supplies, Volkswagen and Ganfeng also agreed to cooperate on future topics such as battery recycling and solid-state batteries.