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Volkswagen Aims to Secure Supply of Battery Metals for EVs

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Volkswagen AG is making long-term arrangements to secure supply of battery metals required for electric vehicles (EVs), per a Bloomberg report. In fact, the German auto giant has invited metal traders for discussion on this matter.

In fact, the carmaker, in an email, has stated that it is in talks with producers of materials for electric cars. The company intends to initiate talks on the commodities’ suitability on its supply chain.

Importantly, till this year, cobalt has been one of the top-performing metals. Moreover, cobalt, which is generally used for hardening steel, is an essential component in rechargeable batteries, as it is a good conductor of electricity. High demand for cobalt has made many users rush to secure supplies. Volkswagen is aiming at securing long-term purchase contract.

Securing long-term purchases will be crucial for Volkswagen because it plans to spend more than 34 billion euros ($40 billion) in the next five years as part of a push toward battery-powered vehicles and autonomous-driving systems. Notably, early this month, the company announced to pump in €22.8 billion ($26.9 billion) for the development of its main car brand over a period of five years (read more: Volkswagen to Invest $27M Over 5 Years in EV Production).

Over the past six months, shares of Volkswagen have outperformed the industry it belongs to. The company’s shares have gained 26.7% compared with the industry’s growth of 18%.

Currently, Volkswagen has a Zacks Rank #3 (Hold).

A few better-ranked companies in the auto space are AB Volvo (VLVLY - Free Report) , Wabco Holdings Inc. and PACCAR Inc. (PCAR - Free Report) and. While AB Volvo and Wabco Holdings sport a Zacks Rank #1 (Strong Buy), PACCAR carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Volvo has a long-term growth rate of 15%. Its shares have increased 13.6% in the last three months.

Wabco has a long-term growth rate of 15%. Shares of the company have increased 4.8% in the last three months.

PACCAR has a long-term growth rate of 10%. Its shares have increased 3.9% in the last three months.

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