Chinese battery materials supplier Hunan Shanshan Energy and German chemicals giant BASF have agreed to work together to make key components for electric vehicle (EV) batteries in China, where demand for EVs is on the rise.

The joint venture, in which BASF will hold a 51% stake and Shanshan will own the remaining 49%, will make cathode active materials (CAM) and their precursors (PCAM), according to a joint statement released Friday.

The new company will combine BASF’s wide-ranging partnerships in global car manufacturers with Shanshan’s 18-year experience in serving the lithium-ion battery industry, the statement said.

“Through the partnership with BASF, Shanshan will further strengthen the competitiveness in the Chinese market and accelerate the integration into the global market by providing high-quality services and products to customers in China and around the world,” Shanshan Chairman Zheng Yonggang said.

The tie-up with Shanshan will bring benefits to BASF, which said that the joint venture will help it achieve an annual production capacity of 160 kilotons of the materials by 2022.

The deal, which is expected to close later this summer pending regulatory approval, comes as BASF ramps up its production capacity for battery materials in Europe. Last year, BASF secured a permit to build a new CAM manufacturing facility in Schwarzheide, Germany, as part of its goal to become a major global supplier of CAM for the automotive industry. The Schwarzheide plant is scheduled to open next year.

Contact reporter Ding Yi (yiding@caixin.com)

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