Electric vehicle (EV) battery startup Britishvolt has signed a deal with South Korean battery materials firm Posco Chemical (003670.KS) designed to secure the supply of cathode and anode materials, the two companies said on Thursday.
The two companies have signed a memorandum of understanding and are working on a longer-term agreement, which “paves the way to providing Britishvolt with a secure supply of active battery materials as we start to ramp up pilot production”, Britishvolt chief executive Orral Nadjari said in a statement.
Britishvolt said Posco’s ownership of mines and processing facilities across the battery sector would ensure “end-to-end, stable, supply chain supply”.
Earlier this year, Posco and U.S. carmaker General Motors (GM.N) announced they would jointly build a $400 million plant to produce cathode materials that will be able to supply 1 million EVs in North America by 2025.
Major carmakers have been racing to secure battery cell supplies, but finding enough battery raw materials may be a bigger problem.
Failure to obtain adequate supplies of lithium, nickel, manganese or cobalt could slow the shift to EVs, make those vehicles more expensive and threaten carmakers’ profit margins.
Stellantis CEO Carlos Tavares said last month he expected a shortage of EV batteries would hit the auto industry in 2024-2025 as manufacturers try to ramp up EV sales while still building new battery factories.
Britishvolt is working with British sports carmakers Aston Martin (AML.L) and Lotus to develop high-performance EV batteries.
The startup has secured UK government backing for a battery plant project in northern England, unlocking 1.7 billion pounds ($2.1 billion) in private funding.
($1 = 0.8224 pounds)