The fact that lithium is an important component of lithium-ion batteries can already be seen from the name – and like every other manufacturer, Tesla needs large quantities of it in order to produce battery cells for its electric cars and stationary storage devices itself or for partners. With a new process, the company wants to extract the raw material from deposits in the US state of Nevada, among other things, announced CEO Elon Musk at his Battery Day at the end of September 2020. But the implementation of these plans is likely to take some time, and in the meantime Tesla has secured thousands of tons of lithium from Chinese production by 2025.
“Enough for Model Y from China”
This agreement became known through a stock exchange publication by the Sichuan Yahua Industrial Group from China, reported the news agency Reuters shortly before the end of the year. Its subsidiary Yaan Lithium has signed a contract with Tesla for rechargeable lithium hydroxide with a volume of $ 630-680 million from 2021 to 2025. According to analysts, this corresponds to a total of 63,000-88,000 tons of the battery material, i.e. around 15,000 tons per year.
This naturally raises the question of how many mega- or gigawatt hours of battery cells can be made from them, and Tesla observers spoke out on Twitter about this. According to consultant Rodney Hooper, the volume ordered by Tesla is roughly equivalent to the production capacity of Model Y this year in China alone. There is no official information yet, but unofficially it is reported that there are 250,000-300,000. Similarly, the observer @ jpr007 assumed that the lithium hydroxide from Sichuan Yahua is enough for 21-29 gigawatt hours per year or 330,000 electric cars with 75 kilowatt hours of battery capacity each.
Global Tesla production was already significantly higher in 2020 and is likely to increase again by more than 50 percent in 2021, so that significantly more lithium is needed than the new Chinese partner supplies. As Reuters reports on, Tesla is already buying the raw material from another important supplier in China, Ganfeng Lithium. According to analysts, the new agreement underscores the enormous demand for lithium hydroxide, “especially in view of the ramp-up of Model Y production” in the country.
Own Tesla lithium from Nevada?
Tesla CEO Musk had mentioned nickel as a battery raw material, of which more is urgently needed, but according to the consulting firm Benchmark Mineral Intelligence, lithium (as carbonate and hydroxide) is threatened with a global shortage from next year. From 2027 the situation will be really serious, warned its managing director Simon Moores on Twitter. But by then, Tesla may have a grip on lithium production in Nevada, which experts had expressed doubts about after Battery Day.