General Motors Co (NYSE: GM) has announced three deals for raw materials supplies necessary for building a million electric vehicles a year. This comes as buyers of major components for EVs step up efforts to get suppliers by signing direct agreements with battery metal producers.
GM signs raw materials deal enough to produce 600,000 EVs
Ford Motor Co. unveiled a list of raw material suppliers about a week ago, ranging from Indonesian nickel to Argentine lithium, and sufficient to produce 600,000 electric vehicles annually.
Due to the global move toward electric vehicles, demand for nickel, lithium, cobalt, and other essential components of EV batteries is growing faster than supply, which is being constrained by logistical issues associated with Covid-19 and an overall lack of investment. This is driving up prices. In addition, concerns about China’s hegemony in the material production and refining industries are also growing. In light of current trade and political tensions, which are forcing a re-evaluation of global supply chains, reliance on the Asian country is now viewed as a risk.
House Mountain Partners president Chris Berry said, “These deals underscore the importance of locking in long-term and diverse sources of raw materials. Access to the raw materials is going to be very interesting to watch in the back half of this decade.”
Automakers are experiencing delayed shipments across the EV market, which is escalating worries about supply security. They are motivated by this and are demonstrating supply chain management. According to David Deckelbaum, a researcher at Cowen & Co., announcing deals with materials producers might be a defining feature for the advancement of EV manufacturers.
GM signs three supply deals
The first of General Motors’ new contracts, which will deliver 968,000 metric tons of electrode materials to LG Chem Ltd. until 2030, is for its next-gen electric vehicles. The second is a long-term contract to secure lithium with Livent Corp. The third partnership will provide electrode material between 2023 and 2025 and is with Posco Chemical Co.
By 2025, according to Chief Financial Officer Paul Jacobson, General Motors will be able to produce one million EVs annually thanks to these supply agreements.