In a strategic move to fortify its electric vehicle (EV) supply chain, South Korea’s top automaker, Hyundai Motor Group, has inked two significant long-term agreements for lithium hydroxide supply from leading Chinese suppliers.
Chengxin Lithium Group Co. Collaboration
Hyundai Motor Group has officially entered into a four-year supply agreement with Shenzhen Chengxin Lithium Group Co. and its affiliate Centillion Holdings International Ltd. This landmark deal signifies Hyundai’s first direct procurement of a critical raw material crucial for EV batteries, reflecting the automotive giant’s commitment to ensuring a stable supply chain.
Under the agreement, Hyundai will source lithium hydroxide from Chengxin’s production base in Chengdu, Sichuan Province, until 2027. Sichuan, a focal point of China’s lithium battery industry, accounts for 28% of the country’s lithium salt production. This move aligns with the growing demand for lithium hydroxide in high-nickel cathodes, enhancing energy density and charge-discharge performance in EV batteries.
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While the specific volume and value of the deal remain undisclosed, Chengxin praised the collaboration, stating that it strengthens their long-term bilateral partnership and recognizes the quality of their lithium hydroxide.
Ganfeng Lithium Group Co. Ltd. Partnership
In a parallel development, Hyundai Motor Company has also signed a “Long-Term Supply Agreement” with Ganfeng Lithium Group Co., Ltd., the world’s largest lithium producer by market capitalization. This agreement outlines the supply of lithium hydroxide products for EV battery production from January 1, 2024, to December 31, 2027.
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The annual supply quantities will follow the agreement terms, and a specified formula will determine pricing. Ganfeng expressed optimism about the collaboration, highlighting its positive impact on Hyundai’s lithium demand and Ganfeng’s profitability during the contract period.
Ganfeng, known for its comprehensive lithium product portfolio, is a crucial producer actively involved in developing power batteries. The company unveiled its first-generation solid-state battery in December 2021 and commenced mass production in May 2023.
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These agreements come amid a global race among automakers to secure a stable supply of battery materials, driven by the US Inflation Reduction Act, which provides tax incentives to EV makers and battery suppliers. Companies can avail of these benefits by processing battery materials into cells outside of China.
As Hyundai continues strengthening its battery materials supply chain, these latest agreements with Chengxin Lithium Group and Ganfeng Lithium Group Co., Ltd. position the automaker for sustained success in the rapidly evolving electric vehicle landscape.