Following the news that Chinese battery maker Contemporary Amperex Technology (CATL) has agreed to buy an almost 25% stake in cobalt producer CMOC for around $3.7 billion and Tesla is in talks to buy a stake in Glencore;

Dr Lil Read, Senior Analyst in Thematic Intelligence at GlobalData, a leading data and analytics company, offers her view:

“Tesla’s and CATL’s moves highlight a cross-industry trend whereby electric vehicle (EV) and battery leaders are vertically integrating their supply chains by acquiring mines and stakes in mining companies—securing materials that would otherwise be sourced from China or other geopolitically sensitive regions. As the cold tech war between the West and China continues, vertical integration will be one of the few remaining ways to secure critical raw materials reliably. GlobalData expects that this trend will accelerate throughout 2023 and drive merger and acquisition (M&A) deal activity.”

Daniel Clarke, Analyst in Thematic Intelligence at GlobalData, offers his view:

“Geopolitics will become an exponentially more important theme in the battery industry over the coming years. The US will attempt to stymie China’s EV and battery sector dominance by imposing sanctions on key technologies and materials used in the manufacturing process while incentivizing firms selling into the US to avoid using Chinese batteries and raw materials.

“Battery makers and EV manufacturers will look to reshore or ‘friendshore’ their operations to countries with lower geopolitical risk. However, reshoring in these countries often has a high initial cost, reducing price competitiveness.”