Volkswagen Group (OTC: VWAGY) said on Monday its China subsidiary will set up two joint ventures, with Huayou Cobalt and Tsingshan Group, to secure nickel and cobalt for making electric-vehicle batteries. 

What Happened: The joint ventures will be both upstream and downstream to ensure end-to-end cathode supply chain needs and lower battery-making costs by 30% to 50% in the long term, the company said.

The joint venture with Huayou will focus on the downstream operation for refining nickel and cobalt sulfates. 

Volkswagen China will also form an upstream alliance with Huayou and Tsingshan in Indonesia, where 10% of the global laterite nickel ore reserves are located. 

Volkswagen expects EVs to account for about half of its total vehicle sales by 2030. It has also targeted that almost 100% of its new vehicles in major markets should be zero-emission vehicles.

See Also: Tesla Strikes Deal To Secure Nickel Supplies From Tamarack In Minnesota

Why It Matters: Automakers worldwide are rushing to secure supplies of raw materials that go into making EV batteries. 

Cathode materials are the main component of lithium-ion batteries and account for a large share of the battery cell costs. 

Tesla Inc (NASDAQ: TSLA) earlier this year said it would secure 75,000 metric tons of nickel concentrates from Talon Metals Corp’s (OTC: TLOFF) Tamarack mines in central Minnesota, the first such U.S.-based deal for the Elon Musk-led company.

Tesla has also signed a deal to secure nickel supplies from BHP Group Ltd (NYSE: BHP) from the mining giant’s Nickel West asset in Australia.

Demand for lithium and nickel is expected to soar as global economies and companies switch to EVs. Prices of the key metals used for battery making have already rocketed to new highs.

Price Action: VWAGY stock closed 1.2% higher at $24.6 a share on Friday.

Photo courtesy: Volkswagen