Nickel deal from Tesla


The occupation of Ukraine by Russia, one of the world’s largest nickel suppliers, raises concerns about the supply of nickel, which is critical in electric car battery production.

However, in search of the precious metal all over the world, Tesla has signed agreements with several nickel suppliers since 2021. This includes several years of supply deals with mining giant Vale SA. According to Bloomberg sources, the deal, which has not been disclosed, includes nickel to be obtained from Canada.

Unlike other automakers, Tesla has been working for years on how to secure its nickel supply. These studies took place as part of the vertical consolidation that Elon Musk focused on to gain control over Tesla’s supply chain.

In Reno, Nevada, the firm, which operates a huge battery factory with Panasonic, manufactures its own batteries, as well as purchases battery cells from other major suppliers and manufactures its own batteries.

In addition, it continues to work continuously on how to process raw materials and advances that can be made in the production of batteries.

“Tesla is a few steps ahead”

“Tesla’s actions with nickel give them a hidden competitive advantage,” said Gene Munster, Managing Partner of Loup Ventures, “Tesla remains several steps ahead of the rest” made its assessment.

Musk pointed out that the biggest concern for the company, which increased production, was the supply of nickel. The availability of the precious metal remains a concern in the electric car industry. According to BloombergNEF, the need for nickel will reach 1.5 million tons in 2030. This figure was estimated as 400,745 tons for this year.

In a phone call with mining manufacturers two years ago, Musk called “Please remove more nickel” and said, “If you can extract nickel efficiently and environmentally, Tesla will sign huge long-term contracts with you.”

Sanctions imposed on Russia, which has a 17 percent production share in the supply of refined premium nickel needed for electric car batteries, make the situation even more worrying.

Prices tripled

Metal prices, which rose by 30 percent with the beginning of the Ukrainian occupation and tripled due to the short position compression experienced afterwards, gave back these gains in the ongoing process. If there are signs that the war will end, it is thought that the market will return to normal.

Tesla’s supply agreement with Vale is just one of the deals it has made in recent years. The electric vehicle giant agreed in January to buy 75,000 metric tons of nickel from Talon Metals’ Minnesota operations. This was followed by procurement from the Australian operations of the world’s largest mining company, BHP Group.

Talon Metals Spokesperson Todd Malan, evaluating Tesla’s position in the supply chain, said, “People don’t understand how far Tesla is when it comes to ensuring the security of supply of raw materials and an integrated approach for battery components.”

Brazil-based Vale company did not comment on its agreement with Tesla, while announcing that it plans to increase its sales to the EV sector from 5 percent to 30-40 percent. Shares of the firm gained 2.8 percent before the session in New York.

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