Elon Musk has again raised the idea that Tesla could buy a miner to speed up the supply of metals essential to the production of electric vehicles around the world.
It’s not the first time Musk has made such a comment, but so far he has not done anything about it.
Just how that will speed up production was not explained by Musk who continues to try and assemble a group of investors and bankers to finance his $US44 billion takeover of Twitter.
The EV industry is getting concerned that there may not be enough supply of lithium, nickel, copper and other metals to match demand later this decade.
That’s also linked to concerns about the rising prices of these metals, particularly lithium which at the moment is essential to batteries.
Tesla’s batteries for short term use (city type vehicles) now use a lithium-iron-phosphate (LFP) chemistry rather than nickel-cobalt-aluminium which Tesla will continue to use in its longer-range models.
“It’s not out of the question,” Musk told the FT Future of the Car 2022 conference. “We will address whatever limitations are on accelerating the world’s transition to sustainable energy. It’s not that we wish to buy mining companies, but if that’s the only way to accelerate the transition, then we will do that.”
The trouble with buying a mining company is that not all them produce the same commodities – some produce gold as well as copper, but no lithium, others nickel, copper but no lithium. Some produce iron ore, copper, nickel and not lithium. Some produce aluminium but no PGE minerals (such as palladium).
The problem is that by buying one or two, Tesla would try to keep that output for itself, meaning there would be a shortage of minerals for other producers which could impact the entire industry.
Tesla and other EV makers could pay more for the minerals and encourage higher production.
But then there are political problems – Russia and China are not very stable areas to invest or buy resource companies, nor are South Africa, Chile, Brazil, Argentina, Peru or elsewhere in South America.
That would leave the US (which is not really interested in lithium with only one mine – and a lot of hot air about new mines but little action). Australia would be the prime target, followed by Canada but resource nationalism is on the rise in both countries.
While the auto giant has EV metals contracts with suppliers across the globe, its goal to produce 20 million vehicles annually by 2030 – what Musk called an “aspiration, not a promise” – will require vastly more supplies of metals.
Tesla produced just under 1 million EVs last year and was planning 1.5 million with plants in Austin Texas and Berlin ramping up.
But the lockdowns in Shanghai have forced the company to cut production (and seen its deliveries to customers sharply curtailed as well – both in China and markets like Australia).
Shanghai is in its sixth week of an intensifying lockdown that has tested the ability of manufacturers to operate amid hard restrictions on the movement of people and materials.
Tesla is suffering because of the lockdown with output curtailed this week because of a shortage of components and raw materials.
Reuters said Tesla planned to make less than 200 vehicles at its factory in the city on Tuesday, a fraction of the 1,200 units it had aimed for when the plant re-opened in late April after a 22-day shut down.
China’s Car Makers Association (CPCA) said on Tuesday that after reopening, the Tesla factory had produced 10,757 vehicles by the end of April, selling just 1,512 of them.
That compared to 65,814 cars sold in March and was the lowest sales total since April 2020, four months after the factory started delivering China-made cars.
Tesla did not export any China-made Model 3s and Model Ys from the Shanghai plant in April, the data also showed.
Tesla has lithium supply deals with Ganfeng Lithium Co, Livent Corp and Albemarle Corp, among others. Ganfeng and Albermarle supply some of their lithium from operations in Western Australia.The company’s lithium supply deal with Piedmont Lithium Inc was put on hold last year.
Tesla has nickel supply deals with BHP, Vale SA and Talon Metals Corp.