Tesla Signs Deal for Getting Key Component in Electric Car Batteries

Electric vehicle maker Tesla has signed a deal recently with Australia’s Syrah Resources, who operates one of the largest graphite mines in the world.

The deal fortifies Tesla’s efforts to get a key battery component outside of China. The company is now turning to the country of Mozambique through the deal with Syrah Resources.

The Texas-based electric automaker plans to buy up 80% of what the plant produces — 8,000 tons of graphite per year — starting in 2025, according to the agreement.

The company will buy the material from the company’s processing plant in Vidalia, Louisiana, which sources graphite from its mine in Balama, Mozambique. The deal is part of Tesla’s plan to ramp up its capacity to make its own batteries so it can reduce its dependence on China, which dominates global graphite markets, said Simon Moores of United Kingdom-based battery materials data and intelligence provider, Benchmark Mineral Intelligence.

“It starts at the top with geopolitics,” Moores said. “The U.S. wants to build enough capacity domestically to be able to build (lithium-ion batteries) within the USA. And this deal will permit Tesla to source graphite independent from China.”

According to Moores, producing the batteries in the U.S. will reduce some of the questions Tesla is facing about its ties to China, where there are environmental concerns at some mines.
Tesla is making almost a million electric cars per year, and sourcing enough batteries is its biggest constraint, he said.

“They’ve upped their own battery manufacturing capacity,” Moores said, but still “they can’t get enough batteries.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.