Stellantis locks in lithium supply agreement to secure EV battery materials

Stellantis, the global corporation formed through a merger between Fiat Chrysler Automobiles and French automaker Groupe PSA, signed a binding agreement with a lithium producer as more automakers look to secure key parts of the battery supply chain. The agreement is one in a flurry of deals between automakers and suppliers as the demand for EVs rises.

Vulcan Energy Resources will produce battery-grade lithium hydroxide from a brine project in the Upper Rhine Valley in Germany. Generally, lithium is produced either via hard rock mining or from brine deposit extraction. While both have environmental drawbacks, Vulcan’s site will use renewable geothermal energy to power the lithium extraction process.

The project will also re-inject the spent brine in a closed-loop cycle, leaving no residual waste, such as production tailings. The project in Germany will use a fraction of water and land compared to other brine projects, such as those found in South America – which means a smaller carbon footprint and potentially a lower operational expenditure, the German-Australian company added on its website.

Under the five-year supply agreement, Vulcan will send shipments of lithium extracted in Germany to Stellantis beginning in 2026. Over the lifetime of the deal, Vulcan will supply between 81,000 metric tons and 99,000 metric tons of lithium hydroxide to the automaker. The two companies did not disclose financial terms of the deal, but it’s subject to both the commencement of commercial operations at the extraction site and product qualification.

The deal is part of Stellantis’ sweeping electrification strategy, which it outlined in July, that earmarks €30 billion ($35.5 billion) for EVs and new software over the next four years. The automaker aims to manufacture 130 gigawatt hours of battery capacity by 2025 and around 260 gigawatt hours across five factories in North America and Europe by 2030.

It’s the latest sign that global automakers are looking to secure their slice of finite raw materials like lithium, a key mineral in electric vehicle batteries. General Motors has made similar investments in a California lithium extraction project, while Tesla has inked its own supply deals for minerals like nickel.

Meanwhile, Renault signed its own agreement with Vulcan last week for up to 32,000 metric tons of European-made lithium.