China's BYD Initiates talks with Sigma Lithium for EV materials: Financial Times report

Chinese electric car giant BYD has engaged in talks with Brazilian lithium producer Sigma Lithium to obtain materials for Electric Vehicle (EV) manufacturing, the Financial Times reported.

The report cited Alexandre Baldy, BYD’s chair in Brazil, who revealed discussions about potential collaboration, be it through a supply agreement, joint venture, or acquisition.

Baldy emphasised the active nature of the dialogue with Sigma, a company valued at $2.9 billion, as BYD aims to solidify its position as the world's largest EV manufacturer.

BYD, backed by Warren Buffett's Berkshire Hathaway, recently surpassed Tesla in EV production and is investing $620 million in building its first electric car factory outside Asia in Brazil.

BYD's pursuit of an integrated supply chain in Brazil was highlighted by Alexandre Baldy in a statement to the Financial Times where he conveyed that various possibilities were under consideration, encompassing discussions about supply, potential joint ventures, and even the prospect of an acquisition.

However, he emphasised that, at the moment, none of these options had materialised into concrete plans.

The company is strategically positioning itself to secure a consistent and reliable lithium supply, a crucial element for EV batteries.

Baldy disclosed that BYD representatives met with Sigma’s CEO, Ana Cabral Gardner, in São Paulo last month, highlighting an evolving relationship that, for now, remains shrouded in confidentiality.

This potential move aligns with BYD's broader international expansion plans, including establishing an EV factory in Hungary and exploring opportunities in Mexico.

However, BYD's ambitions have not escaped scrutiny, as global concerns rise over China's quest for technological dominance and control over critical resources for clean tech industries.

With the Biden administration looking to reduce Chinese manufacturing in the US and Europe investigating China's EV industry for alleged unfair competition, BYD's strategic moves are under close observation on the international stage.

Sigma Lithium, despite posting a net loss of C$25.5 million in the first nine months of 2023, is a key player in Brazil's lithium market. Amid a sharp decline in lithium prices causing a drop in shares, Sigma's board is conducting a strategic review, contemplating a potential sale of the business or listing its Brazilian unit on Nasdaq and the Singapore Stock Exchange.

Notably, Volkswagen and Chinese battery maker CATL have been mentioned as potential bidders, but both companies have refrained from confirming or denying their involvement.