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Tesla Signs Lithium Supply Deal With China’s Biggest Producer

Tesla assembly line

China’s largest lithium producer, Ganfeng Lithium, said on Friday that it had signed a three-year deal to supply Tesla with lithium hydroxide for batteries—another lithium supply agreement for Tesla as it tries to stay ahead in raw materials sourcing before the coming massive EV competition from legacy carmakers.

The top Chinese lithium producer will supply around one-fifth of its production to Tesla under the deal between 2018 and 2020, according to a filing by Ganfeng Lithium with the Shenzhen stock exchange as carried by Bloomberg. The agreement can be extended by another three years, Ganfeng Lithium said.

In May of this year, Tesla entered into an agreement with Australia’s Kidman Resources Limited. The Australian company entered into a binding deal to supply Tesla with lithium hydroxide for an initial term of three years on a fixed-price take-or-pay basis from the delivery of first product. The deal also has two 3-year term options for renewal.

If Tesla’s Nevada factory reaches battery production equivalent to 35 gigawatt hours by late next year, Tesla may need 28,000 tons of lithium hydroxide from late 2019 onwards, according to forecasts by industry consultants Benchmark Minerals, quoted by Bloomberg.

The lithium hydroxide agreements could help Tesla ramp up battery production and, crucially, Model 3 production, which analysts and investors have been closely watching.

While Model 3 has received all five stars in all segments of NHTSA’s 5-Star Safety Ratings, Tesla and Elon Musk have faced a lot of negative press and brand image over the past two months.

Analysts and investors question Musk’s erratic behavior and tweets about going private, “funding secured”, which secured Musk and Tesla an investigation by the SEC and the DOJ.

In one of the most recent reports about Tesla, Bloomberg reported on Friday that another senior manager is said to be leaving the company, extending an already long list of the top management exodus.

By Tsvetana Paraskova for Oilprice.com

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