Russian nickel production is vital to the production of electric-vehicle batteries, and the invasion of Ukraine has added to the agitation of electric-vehicle makers about the supply of nickel.
However, Tesla Inc. had been searching the world for nickel since 2021, establishing deals with multiple suppliers.
Mining giant Vale SA has signed a multiyear supply agreement. There hasn’t been an official announcement of the arrangement, but those acquainted with the situation say that it covers nickel from Canada.
To differentiate itself from the competition, Tesla has spent several years figuring out how to get its own nickel.
Elon Musk, Tesla’s CEO, is making these moves as part of a strategy to keep a tight grip on the company’s supply chain. In a joint venture with Panasonic Corporation, the corporation maintains a huge battery-cell facility west of Reno in Nevada. Tesla not only purchases but also manufactures its own batteries. In addition, the organisation is continually working to improve battery manufacturing processes. Executives discussed shortening the route from mine to cathode during a 2020 presentation.
Gene Munster, managing partner of Loup Ventures, argued that Tesla’s use of nickel represents a “secret competitive advantage.” According to Tesla, “Tesla continues to be a few steps ahead in electric vehicle technology.”
The availability of nickel is a source of concern for the entire electric vehicle industry, as Musk has frequently stated that the metal is the company’s main concern as it increases output. According to BloombergNEF, the demand for nickel in the battery sector is predicted to increase from 400,745 tonnes this year to 1.5 million tonnes by 2030.
On an earnings conference two years ago, Tesla CEO Elon Musk pleaded with manufacturers to mine more nickel. “If you mine nickel efficiently and environmentally sensitively, Tesla will give you a huge contract for a long time.”
Russia has 17 percent of the world’s capacity for refined Class 1 nickel, which is needed for electric vehicles, and sanctions on the country over its invasion have increased urgency. Nickel’s price on the London Metal Exchange had risen by 30% since the attack on Ukraine on Feb. 24. A short squeeze caused prices to quadruple in just two days. If there are indicators that the battle is coming to an end, the market may stabilise.
According to BloombergNEF, “the nickel price spike and the ramifications of the Russian-Ukrainian incursion are expected to force battery manufacturers to establish alternate supply lines,” notably in the United States.
The agreement between Tesla and Vale is only one of many that the company has struck in the last year. As of January, an Austin, Texas-based electric vehicle manufacturer had committed to purchasing 75,000 metric tonnes of nickel concentrate from a Talon Metals Corp. plant under construction in Minnesota.. BHP Group, the world’s largest mining firm, agreed to supply material from Australia following the agreement. The New Caledonia nickel mine operator’s agreement with Tesla is another one of Tesla’s agreements.
When it comes to raw materials and an integrated approach to battery materials, “people don’t appreciate how far ahead Tesla is,” Talon Metals spokesperson Todd Malan said.
Vale wants to boost its EV sales from their current 5 percent to between 30 and 40 percent in the near future.
In a statement, the Brazilian mining company refused to discuss its relationship with Tesla. Requests for comment from Tesla went unanswered.
Tesla is focusing on nickel-based chemistries for longer-range automobiles because nickel is an important component of electric vehicle batteries’ cathodes. Shorter-range vehicles use iron-phosphate.
Although President Joe Biden’s government is eager to develop a strong battery supply chain in the United States, billions of dollars are being spent to promote the responsible and sustainable domestic sourcing of crucial elements like lithium, cobalt, nickel et al. Senators from both parties are expected to testify before the Senate Committee on Energy and Natural Resources next Thursday.