VW accelerates shift to electric cars

Firm is moving to secure supplies of cobalt, a vital component of rechargeable cells

London, Sept. 22: Germany’s Volkswagen is moving to secure longterm supplies of cobalt, a vital component of rechargeable batteries, as the group accelerates its ambitious shift to electric cars.

Cobalt industry sources said that VW, the world’s largest automaker, has asked producers to submit proposals on supplying the material for up to 10 years from 2019.

Volkswagen, which decided on the strategic shift to electric vehicles (EVs) after it was engulfed in the “dieselgate” scandal, plans to invest more than 20 billion euros ($24 billion) in zero-emission vehicles by 2030 to challenge pioneer Tesla in creating a mass market.

The company, which aims to make up to three million EVs a year by 2025, wants all the cobalt tender proposals submitted by the end of September. “The tender doesn’t actually tell you how much cobalt they want. They tell you how many EVs they want to make, you have to work out the cobalt content yourself,” said one cobalt industry source.

Volkswagen did not respond to Reuters questions on the details of the tender but noted that the group would need more than 150 gigawatt hours of battery capacity annually by 2025 for its electric vehicles.

This would mean major purchases of necessary materials. “The procurement project is one of the largest in the history of the automotive industry, with a total order volume of over 50 billion euros,” it said in a statement. “That will meet the Group’s needs for the first wave of e-mobility.”

Demand for cobalt is expected to soar in the coming years due to the electric vehicle revolution as governments around the world crack down on pollution. Volkswagen is under particular pressure as it had been slow to embrace electric cars and self-driving technology until admitting two years ago to cheating on U.S. diesel emissions tests.

Battery and auto manufacturers need to sign multi-year deals to secure supplies of raw materials including cobalt and lithium.

The Democratic Republic of Congo (DRC) produces roughly 65 percent of global cobalt supplies estimated at around 100,000 tonnes this year. Canada, China, Russia, Australia and Zambia are also major sources.

At the company level, the market is dominated by Glencore, which produced more than 28,000 tonnes last year.

Reuters recently reported that Glencore had signed a major deal to sell up to 20,000 tonnes of cobalt products to a Chinese firm, a move that would help Volkswagen secure car batteries for its shift to electric vehicles.

According to the cobalt industry sources, Volkswagen said wanted all contracts agreed by the end of the year.

Electric vehicles use rechargeable batteries containing cobalt, a byproduct of copper and nickel output, which boosts energy density and extends battery life.