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Tesla Secures Another Lithium Supply Deal

Tesla and China’s Sichuan Yahua Industrial Group have signed a long-term lithium hydroxide supply deal. The group disclosed the five year supply agreement in a filing to the Shenzhen Stock Exchange today, according to Reuters. According to the report: “Yahua, which is based in southwest China’s Sichuan province, did not provide tonnage figures but, in a filing to the Shenzhen Stock Exchange, put the total value of the contract at $630-880 million over 2021-25.”

While unveiling its new tabless in-house battery cell during its highly anticipated Battery Day event this past September, Tesla also announced its plans to produce it. However, Tesla CEO, Elon Musk reassured that the company will continue to obtain as much battery supply from other manufacturers as possible to secure large quantities of lithium in order to support its ambitious growth plans.

Tesla has worked to secure resources for its battery production from several different sources aside from the new Yahua deal. China’s Ganfeng Lithium announced in 2018, a new deal to supply lithium-hydroxide to Tesla through 2020, with the option to extend the contract by 3 years. The automaker also recently secured a deal to get lithium from Australia and has a lithium supply agreement currently in the works with a North Carolina mining project.

Although Tesla is still expected to rely on lithium suppliers long-term, the automaker announced earlier this year its plans to mine lithium itself, claiming it acquired a 10,000 acre plot in Nevada. The company also claimed to be developing its own extraction technique.

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