At a time when commodities prices are going all over the place, the German automaker Volkswagen is going back to the drawing board on EV battery contracts.
Reuters reports the group is poised to partner with Huayou Cobalt and Tsingshan to source around 120,000 tons of nickel and 15,000 tons of cobalt in a project worth €30 billion.
Reportedly, there is an MOU in place for this project.
Leaders looking at the contact cite high prices for nickel on the commodities market and gouging by battery makers. Reuters quotes Chinese EV manufacturer Li Auto, Li Xiang, in calling Q2 prices “outrageous.”
The price of nickel doubled recently on the London Metal Exchange before falling back down pretty quickly.
“On March 8, nickel prices more than doubled in a matter of hours,” writes Matt Clinch at CNBC. “The price climbed above $100,000 a metric ton as China’s Tsingshan Holding Group, one of the world’s top producers, bought large amounts to reduce its short bets on the metal. Trading was halted on the LME as the move added to a significant price rally. On Wednesday last week, the LME attempted to resume nickel trading after the rare shut down. However, a ‘systems error’ allowed a small number of trades to go through below a newly imposed 5% daily price limit, and the exchange was temporarily halted once again.”
For its part, Tesla seems poised to outlast the commodities bubble, although the top EV maker and others are taking steps to triumph.
“VW’s move comes as rivals, from Tesla to BYD, are raising prices for EVs due to higher raw material costs and follows Ford’s announcement last week spelling out plans for a nickel cell JV in Turkey,” Reuters reports.
If you have EV-related stocks, keep checking on how the unrest in Ukraine affects commodities.