Stellantis Secures Lithium Supply for EV Batteries

Stellantis Secures Lithium Supply for EV Production

Stellantis, created by the fusion of Fiat Chrysler Automobiles and Groupe PSA, has formalized a binding agreement with a lithium producer. This move reflects a growing trend among automotive manufacturers to solidify their access to crucial components within the electric vehicle (EV) battery supply chain.

Agreement Details with Vulcan Energy Resources

The agreement centers around Vulcan Energy Resources, which will be responsible for producing battery-grade lithium hydroxide. Production will originate from a brine project situated in Germany’s Upper Rhine Valley.

Typically, lithium is sourced through either hard rock mining or extraction from brine deposits. Both methods present environmental challenges. However, Vulcan’s approach will leverage renewable geothermal energy to power the lithium extraction process, minimizing its environmental impact.

Sustainable Extraction Process

A key aspect of the project involves re-injecting the processed brine back into a closed-loop system. This eliminates the creation of residual waste products, such as tailings commonly associated with lithium production.

Compared to other brine projects, particularly those in South America, the German facility is projected to require significantly less water and land. This translates to a reduced carbon footprint and potentially lower operating costs, as highlighted by the German-Australian company.

Supply Agreement Terms

Under the terms of the five-year agreement, Vulcan will commence shipments of lithium extracted in Germany to Stellantis starting in 2026. The total supply over the duration of the deal is estimated to be between 81,000 and 99,000 metric tons of lithium hydroxide.

While the financial specifics of the agreement remain undisclosed, it is contingent upon the commencement of commercial operations at the extraction site and successful product qualification.

Stellantis’ Electrification Strategy

This deal aligns with Stellantis’ broader electrification strategy, unveiled in July. The company has allocated €30 billion ($35.5 billion) towards investments in EVs and new software development over the next four years.

Stellantis aims to achieve a battery production capacity of 130 gigawatt hours by 2025, expanding to approximately 260 gigawatt hours through five factories located in North America and Europe by 2030.

Industry Trend: Securing Raw Materials

This agreement underscores a wider industry trend of automakers actively seeking to secure access to essential raw materials, particularly lithium, which is vital for EV battery production.

General Motors has also made investments in a lithium extraction project in California, and Tesla has established its own supply agreements for minerals like nickel.

Furthermore, Renault recently signed a similar agreement with Vulcan, securing up to 32,000 metric tons of European-sourced lithium.