Tesla secures battery material supply deals with two major Chinese companies

Tesla has struck battery material supply deals with two major Chinese companies, according to the new fillings. The move is aimed at ensuring batteries are supplied to support electric vehicle production through the middle of the decade.

Automakers who are serious about electric cars are scrambling to secure as much long-term battery supply as possible because it will determine how many electric cars they will be able to produce.

With sales of internal combustion engines declining, their ability to produce electric vehicles will soon represent their full production capacity and their only growth potential.

Ford and GM recently announced plans to secure critical metals and battery supplies to support production of 600,000 and 1 million electric vehicles by 2025.

As for Tesla, it only sells electric cars, and as such, the company has been insuring the long-term supply of batteries for decades now, but has been able to do so more efficiently in recent times due to its size.

The automaker is looking to exit 2022 with a production rate of about two million electric cars a year — twice what its American competitors hope to achieve within three years.

From there, Tesla aims to grow at around 50% per year, and that will require a massive amount of battery material.

Today, we learned that Tesla has secured battery raw materials through new contracts with Zhejiang Huayou Cobalt Co., Ltd. and CNGR Advanced Material Co in China (first reported by Bloomberg):

Zhejiang Huayou Cobalt Co., Ltd. And CNGR Advanced Material Co. has pricing agreements with the electric car giant for supplies through the middle of this decade, according to separate exchange data from the two companies. Trades for ternary precursor materials – essential chemical cocktails for energy storage in lithium-ion batteries.

Huayou Cobalt will provide battery-processed cobalt to Tesla from July 1, 2022 through the end of 2025, according to the filing. The miner specified that product prices “will be subject to market rates for nickel, cobalt, and manganese, as well as refining fees.”

CNGR will supply Tesla between 2023 and 2025 based on the new contract – although the two companies previously supplied the US EV maker.

These new contracts for Tesla follow several more throughout the entire battery supply chain.

In January, Tesla signed a deal to secure nickel from a new mine in the United States. Tesla ended up adding another deal with an upcoming lithium mine in Australia developed by Liontown in February.

A month later, Tesla added another lithium contract with a new mine in Australia.

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