In a mid-2023 Tesla earnings name, Musk appeared relieved to see costs for the battery steel had declined. “Lithium costs went completely insane there for some time,” he mentioned. Decrease battery costs will carry EVs nearer to price parity with inner combustion engines automobiles, resulting in wider adoption and elevated demand.
Through the 2024 US presidential election, Musk threw his assist behind Republican candidate and former president Donald Trump, who has been traditionally essential on electrical automobiles and subsidies. Following Trump’s election win on November 5, AP Information reported that these stances may assist Tesla as they might be extra prone to hurt smaller opponents who have been much less established than the EV big. Tesla’s share worth shot upwards in response to the election final result.
This spring, Musk invited Argentine President Javier Milei to the Tesla manufacturing unit in Austin, Texas, the place the 2 reportedly mentioned the funding alternatives in Argentina’s lithium sector. As a distinguished member of the prolific Lithium Triangle, the South American nation is the fourth main lithium producer by nation.
Australia’s hard-rock deposits and Chile’s brines are additionally high sources for the world’s lithium provide. However lithium refining is dominated by China, which accounted for 72 p.c of world lithium processing capability in 2022.
With the limelight on Musk and Tesla in 2024, buyers ought to know the place the electrical automobile firm sources its lithium.
Learn on to study extra about the place Tesla will get its lithium, how a lot lithium is in a Tesla battery and what the EV maker is doing to raised safe its lithium provide chain.
Which lithium firms provide Tesla?
Tesla has offers with a number of lithium suppliers, some which might be already producers and a few which might be juniors growing lithium tasks.
On the finish of 2021, Tesla inked a three-year lithium provide take care of high lithium producer Ganfeng Lithium (OTC Pink:GNENF,SZSE:002460), and the Chinese language firm started offering merchandise to Tesla beginning in 2022. Main miner Arcadium Lithium (NYSE:ALTM,ASX:LTM), which is about to be acquired by Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) additionally has provide contracts in place with the EV maker.
China’s Sichuan Yahua Industrial Group (SZSE:002497) agreed to produce battery-grade lithium hydroxide to Tesla by 2030. Beneath a brand new, separate settlement finalized in June 2024, Yahua is about to produce Tesla with an unspecified quantity of lithium carbonate between 2025 and 2027, with the choice to increase the contract by one other yr.
Tesla additionally holds offers with junior miners for manufacturing that’s but to come back on stream. Liontown Assets (ASX:LTR,OTC Pink:LINRF) is about to produce Tesla with lithium spodumene focus from its AU$473 million Kathleen Valley mission. The deal is for an preliminary 5 yr interval set to start this yr, and manufacturing started in July 2024.The corporate expects to achieve nameplate capability in calendar Q1 2025.
In January 2023, Tesla amended its settlement with Piedmont Lithium (ASX:PLL,NASDAQ:PLL), which now provides the US automaker with spodumene focus from its North American Lithium operation, a three way partnership with Sayona Mining (ASX:SYA,OTCQB:SYAXF). The deal is in place by the top of 2025.
Regardless that Tesla has secured lithium from all these firms, the EV provide chain is a bit extra advanced than simply shopping for lithium immediately from miners. Tesla additionally works with battery makers, corresponding to Panasonic (OTC Pink:PCRFF,TSE:6752) and CATL (SZSE:300750), which themselves work with different chemical firms that safe their very own lithium offers.
What are Tesla batteries fabricated from?
Tesla automobiles use a number of totally different battery cathodes, together with nickel-cobalt-aluminum (NCA) cathodes and lithium-iron-phosphate (LFP) cathodes.
Tesla is thought for utilizing NCA cathodes developed by Japanese firm Panasonic. This sort of cathode has greater power density and is a low-cobalt possibility, however has been much less adopted by the trade in comparison with the broadly used nickel-cobalt-manganese (NCM) cathodes. Other than that, South Korea’s LG Power Options (KRX:373220) provides Tesla with batteries utilizing nickel-cobalt-manganese-aluminum (NCMA) cathodes.
As talked about, it wasn’t simply lithium that noticed costs climb in 2021 — cobalt doubled in worth that very same yr, and though it has declined since then, the battery steel stays important for a lot of EV batteries. Most cobalt mining takes place within the Democratic Republic of Congo, which is commonly related to little one labor and human rights abuses, fueling issues over long-term provide.
That mentioned, not all Tesla’s batteries comprise cobalt. In 2021, Tesla mentioned that for its standard-range automobiles it will be altering to lithium-iron-phosphate (LFP) cathodes, that are cobalt- and nickel-free. On the time, the corporate was already making automobiles with LFP chemistry at its manufacturing unit in Shanghai, which provides markets in China, the Asia-Pacific area and Europe.
In April 2023, Tesla introduced that it deliberate to make use of any such cathode chemistry for its short-range heavy electrical vehicles, which it calls “semi gentle.” The corporate can be trying to make use of LFP batteries in its mid-sized automobiles.
On the high of this yr, Tesla made strikes to supply LFP batteries at its Sparks, Nevada, battery facility in response to the Biden Administration’s new rules on battery supplies sourcing, particularly on these sourced from China. Reuters stories Tesla battery provider CATL will promote idle tools to the automobile maker to be used on the plant, which could have an preliminary capability of about 10 gigawatt hours.
What firm makes Tesla’s batteries?
Tesla works with a number of battery suppliers, together with Panasonic, its longtime accomplice, in addition to LG Power Options, the second largest battery provider on this planet. They provide the EV maker with cells containing nickel and cobalt.
China’s CATL has been supplying LFP batteries to Tesla for vehicles made at its Shanghai plant since 2020. It’s additionally been reported that BYD Firm (OTC Pink:BYDDF,SZSE:002594) is supplying Tesla with the Blade battery — a much less cumbersome LFP battery — which the automobile producer has utilized in a few of its fashions in Europe. Moreover, BYD is about to work with Tesla on its battery power storage methods (BESS) in China, with a plan to produce 20 p.c of Tesla’s anticipated BESS manufacturing capability, with CATL anticipated to cowl 80 p.c. The manufacturing unit will use the businesses’ LFP batteries.
How a lot lithium is in a Tesla battery?
How a lot lithium do Tesla batteries really comprise? That query is difficult as a result of many components are at play. Usually, it relies on battery chemistry, as demonstrated by the chart under, in addition to battery dimension.
For instance, the customary Tesla Mannequin S incorporates about 138 kilos, or 62.6 kilograms, of lithium. It’s powered by a NCA battery, which has a weight of 1,200 kilos or 544 kilograms.
The quantity of lithium in a Tesla battery may also fluctuate primarily based on mannequin and yr because the battery chemistries and weights are sometimes altering with every new iteration.
Again in 2016, Musk mentioned batteries do not require as a lot lithium as they do nickel or graphite — he described lithium as “the salt in your salad.” Because the chart under exhibits, the steel solely makes up a few tenth of the supplies in every battery.
Metallic content material of battery chemistries by weight.
Chart by way of BloombergNEF.
However a key issue to recollect is quantity — given the quantity of batteries Tesla wants to satisfy its bold targets, it may hit a bottleneck if it may possibly’t safe a gradual provide of uncooked supplies. In fact, that is true not only for Tesla, however for each carmaker producing EVs right this moment and setting targets for many years to come back.
For that motive, demand for lithium-ion batteries is predicted to soar within the coming years. By 2030, Benchmark Mineral Intelligence forecasts that demand will develop by 400 p.c to achieve 3.9 terawatt-hours. Over the identical forecast interval, the agency sees the present surplus within the lithium provide coming to finish.
Will Tesla purchase a lithium mine?
For carmakers, securing lithium provide to satisfy their electrification targets is turning into a problem, which is why the query of whether or not they are going to turn into miners sooner or later continues to come back up.
However mining lithium is just not straightforward, and regardless of hypothesis, it is exhausting to think about an automaker being concerned in it, SQM’s (NYSE:SQM) Felipe Smith mentioned. “You must construct a studying curve — the sources are all totally different, there are various challenges when it comes to know-how — to achieve a constant high quality at an affordable price,” he famous. “So it is troublesome to see that an unique tools producer (OEM), which has a totally totally different focus, will actually have interaction into these challenges of manufacturing.”
Even so, OEMs are coming to the conclusion that they could have to construct up EV provide chains from scratch after the capital markets’ failure to step up, Benchmark Mineral Intelligence’s Simon Moores believes. Moreover, automotive OEMs which might be making EVs will in impact need to turn into miners.
“I do not imply precise miners, however they’re going to have to begin shopping for 25 p.c of those mines in the event that they wish to assure provide — paper contracts will not be sufficient,” he mentioned.
Nonetheless, final yr Musk made it clear to buyers that Tesla is extra centered on growing its lithium refining capabilities, slightly than stepping into the mining sport.
The place is Tesla’s lithium refinery?
Tesla broke floor on its in-house Texas lithium refinery within the better Corpos Christi space of the state final yr. Tesla’s lithium refinery capability is predicted to supply 50 GWh of battery-grade lithium per yr. Musk mentioned in late 2023 that development of the lithium refinery can be accomplished in 2024, adopted by full manufacturing in 2025.
That is an up to date model of an article first revealed by the Investing Information Community in 2022.
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Securities Disclosure: I, Melissa Pistilli, maintain no direct funding curiosity in any firm talked about on this article.
Editorial Disclosure: The Investing Information Community doesn’t assure the accuracy or thoroughness of the data reported within the interviews it conducts. The opinions expressed in these interviews don’t replicate the opinions of the Investing Information Community and don’t represent funding recommendation. All readers are inspired to carry out their very own due diligence.
