Volkswagen seeks partnerships for battery materials 'race'

FILE PHOTO: The logo of German carmaker Volkswagen is seen on the wall of a showroom of a Volkswagen car dealer in Brussels, Belgium July 9, 2020. REUTERS/Francois Lenoir/File Photo

FRANKFURT (Reuters) - Volkswagen, Europe's largest carmaker, is in talks with suppliers to secure direct access to raw materials for electric vehicle (EV) batteries via partnerships, one of its board members said.

Europe's biggest carmaker is trying to extend its control over the industry's supply chain, which gives those with direct access to chips and lithium a decisive advantage to navigate bottlenecks and run plants at full capacity.

The plan is also aimed at catching up with rivals, including Tesla and BMW, which have already struck supply deals with producers of lithium, the most important ingredient in EV batteries.

"We're all in a race. It's about making the most affordable cells and you need scale to do that," Thomas Schmall, Volkswagen's board member in charge of technology, told Reuters.

"Apart from cell manufacturing, which is a new area of business for us, we need to move into vertical integration more strongly, procuring and securing raw materials. This can happen via various forms of cooperation."

Gaining direct control over the supply of raw materials -- which also include graphite, cobalt and nickel -- via partnerships is also vital in getting a better handle on costs, Schmall said.

"80% of cell costs are determined by raw materials. So it's obvious that one needs to be more engaged."

(Reporting by Christoph Steitz and Jan Schwartz. Editing by Jane Merriman)

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