Automaker Stellantis announced plans to invest €50m ($52m) to acquire an 8% stake in decarbonised lithium company Vulcan Energy Resources.

Stellantis’ investment will make it the second-largest shareholder in Vulcan.  

The two firms also agreed to extend their initial lithium supply agreement to ten years.

German-Australian start-up Vulcan plans to use the equity investment from Stellantis for production expansion drilling at its producing Upper Rhine Valley Brine Field (URVBF) in Germany.

Vulcan is currently producing geothermal energy from its URVBF. Under the Zero Carbon Lithium Project, it looks to produce battery-grade lithium hydroxide with a net-zero carbon footprint.

Stellantis CEO Carlos Tavares said: “Making this highly strategic investment in a leading lithium company will help us create a resilient and sustainable value chain for our European electric vehicle battery production.”

By 2030, Stellantis targets 100% of its car sales in Europe to come from battery-electric vehicles. It aims to reach the carbon neutrality goal by 2038.

Vulcan managing director Dr Francis Wedin said: “Stellantis’ significant investment in Vulcan and the Zero Carbon Lithium Project represents a strong statement by one of the world’s largest automakers regarding sustainable and strategic sourcing of battery materials.

“We are fully aligned with Stellantis’ decarbonisation and electrification goals, which represent some of the most ambitious in the industry.

“As our largest offtaker, we look forward to deepening our relationship with Stellantis as a substantial shareholder in Vulcan and our Zero Carbon Lithium business.”