(Yicai Global) March 21 -- Volkswagen has agreed to set up joint ventures with Huayou Cobalt and Tsingshan Holding Group to secure supplies of cobalt and nickel for its electric vehicles in China, according to a report.

Volkswagen Group China has signed agreements with Huayou Cobalt and Tsingshan, auto information website Auto.163 reported today, citing the German carmaker. The three will also strengthen cooperation in battery materials innovation, it said.

The partners will set up an upstream JV in Indonesia to produce nickel and cobalt. The new firm is expected to produce enough nickel and cobalt for 160 gigawatt-hours of batteries when output reaches capacity.

Volkswagen also plans to form a downstream JV with Huayou Cobalt in China’s southern Guangxi Zhuang Autonomous Region to make nickel, refine cobalt sulfate, process precursors, and produce cathode materials to support VW’s growth strategy for new energy vehicles in China.

The partnership will help Volkswagen achieve its long-term goal of cutting battery costs by 30 percent to 50 percent and improve the key performance indicators of power batteries such as capacity density, the automaker said.

Volkswagen delivered 452,900 electric vehicles globally last year, including 93,000 in China.

Editor: Peter Thomas