Volkswagen Group intends to establish joint ventures with two Chinese companies to ensure the supply of raw materials needed to produce batteries for electric vehicles in China.
Under memorandums of understanding the companies signed this week, VW China will form a joint venture in Indonesia with cobalt producer Huayou Cobalt and nickel supplier Tsingshan Group.
In Indonesia, which boasts more than 10 percent of the world’s laterite nickel ore reserves, the partnership, after an expansion, will be able to produce cobalt and nickel materials to support EV battery output of 160 gigawatt hours, VW Group China said.
It will also set up a separate joint venture with Huayou in the south China region of Guangxi to refine nickel and cobalt sulfates as well as produce cathode materials, it noted.
The two partnerships are expected to help VW reduce battery production costs 30 percent to 50 percent in the long term.
VW Group China didn’t release additional details about the two joint ventures.
Despite a 14 percent decline, the German automaker delivered 3.3 million vehicles in China in 2021, maintaining its position as the largest automaker in the market.
VW Group’s EV deliveries in China reached 93,000 last year, more than quadrupling the 2020 tally.