Tesla ink deals to get key battery components outside of China

LONDON – Tesla is turning to Mozambique to buy a key component in its electric car batteries in what analysts believe is a first deal designed to reduce dependence on China for coal lead.

Last month, Elon Musk’s company signed an agreement with Australia’s Syrah Resources, which operates one of the world’s largest graphite mines in the southern African country. It’s a unique partnership between an electric vehicle maker and a major mineral producer for lithium-ion batteries. The value of the deal has yet to be disclosed.

Simon Moores, a UK-based provider of battery materials intelligence and data, said the deal was part of Tesla’s plan to ramp up its own battery production capacity. to reduce dependence on China, which dominates the global graphite market. .

“It started from scratch with geopolitics,” says Moores. “The US wants to build enough domestic capacity to be able to manufacture (lithium-ion batteries) in the US. And this deal will allow Tesla to source its graphite independently from China.”

Moores said making batteries in the US would ease some of the questions Tesla is facing about its relationship with China, where there are environmental concerns at some of its mines. The automaker has also set up a showroom in the Xinjiang region, where Chinese officials are accused of forced labor and other human rights abuses against religious minorities. Islam.

A notice was left seeking comment from Tesla, which has disbanded its media relations division.

The battery industry has faced a shortage of graphite supplies in recent months, Moores said. Graphite stores lithium inside the battery until it is needed to generate electricity by splitting into charged ions and electrons.

It comes as every major automaker is racing to produce electric vehicles amid concerns about climate change.

Tesla is making nearly a million electric cars a year, and sourcing enough batteries is Tesla’s biggest limitation, he said.

“They’ve ramped up their own battery production capacity, but still ‘they can’t get enough batteries,'” says Moores.

A new battery plant the company is building in its new hometown of Austin, Texas, will allow it to move closer to self-sufficiency, but Moores said it is still buying batteries from other manufacturers , “and that won’t change this decade.”

For example, Tesla has a deal with Panasonic to manufacture battery cells at the automaker’s battery plant near Reno, Nevada.

Sam Abuelsamid, lead analyst for e-mobility at Guidehouse Insights, says the deal with Syrah is part of a broader effort by automakers to secure relatively scarce raw materials for batteries. when the demand for electric vehicles will increase.

The deal also brings the Louisiana-processed graphite much closer to Tesla’s plants in the US.

“The pandemic has shown us that we have these long, long, long supply chains, and it doesn’t take long to get them,” said Donald Sadoway, professor of materials chemistry at the Massachusetts Institute of Technology. supply chain disruption. . “Someone can suddenly say, ‘We’re going to raise the price,’ or ‘We’re going to refuse to ship it.’”

Abuelsamid says Tesla’s deal with Syrah won’t make the Chinese government happy because China has a lot of markets for its graphite, including increasing domestic production of electric vehicles, Abuelsamid said.

However, China is Tesla’s largest global market. It has a huge factory near Shanghai and sells about 450,000 vehicles a year there, compared with about 350,000 in the US, Abuelsamid said.

For the Australian miner, the deal is “important” because it has a non-Chinese buyer for its graphite product, Moores said.

Syrah’s graphite mine in the northernmost province of Mozambique, Cabo Delgado, is one of the largest in the world, with the capacity to produce 350,000 tonnes of fine graphite per year.

Cabo Delgado has faced violence in recent years by Islamist extremists, an insurgency that has recently extended inland from coastal areas to neighboring Niassa province.

The mine is located on the main road connecting Cabo Delgado and Niassa provinces, a road that was recently upgraded by a Chinese contractor. At a ceremony to reopen the road in December, President Filipe Nyusi called for vigilance to keep rebels from using the road. ———

Tom Krisher reports from Detroit.

https://abcnews.go.com/International/wireStory/tesla-inks-deal-key-battery-component-china-82293464 Tesla ink deals to get key battery components outside of China

Emma Bowman

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