Elon Musk’s Tesla has signed a deal for a critical component in its electric car batteries, in what analysts believe is a first-of-its-kind arrangement.
Elon Musk’s Tesla has signed a deal for a critical component in its electric car batteries, in what analysts believe is a first-of-its-kind arrangement aimed at reducing the company’s reliance on graphite from China. As per the reports of AP News, last month, the company negotiated a deal with an Australian company, Syrah Resources that owns one of the world’s largest graphite mines in South Africa.
Tesla will obtain the graphite from its mine in Balama, Mozambique. The agreement suggests that starting in 2025, Tesla will purchase 80% of the plant’s output, which is 8,000 tonnes of graphite each year, according to AP News. Syrah will have to demonstrate that the material fits Tesla’s requirements. Graphite holds lithium in a battery until it’s time to break it into charged ions and electrons to generate electricity.
Capacity to produce its own batteries
Simon Moores of UK-based battery materials data and intelligence service Benchmark Mineral Intelligence stated that the transaction is part of Tesla’s ambition to increase its capacity to produce its own batteries in order to minimise its reliance on China, which dominates global graphite markets. Moores believes that this will alleviate some of Tesla’s concerns about its ties to China. The manufacturer has also opened a store in Xinjiang in China.
Moores also stated that the battery industry is facing a graphite shortage at a time when every major automaker is rushing to get into electric vehicles due to climate change worries. Tesla produces about a million electric vehicles each year, and he claims that finding adequate batteries is the company’s biggest challenge, according to AP News. Moores stated that they have increased their own battery manufacturing capability, but they still can’t acquire enough batteries.
Tesla sells around 450,000 cars there each year in China
Sam Abuelsamid, who is the senior e-mobility analyst for Guidehouse Insights suggests that the arrangement with Syrah is part of a larger drive by automakers to source relatively scarce raw materials for batteries as demand for electric vehicles grows. The agreement also gets the graphite processed in Louisiana. Tesla sells around 450,000 cars there each year in China, compared to about 350,000 in the United States, according to AP News.