Tesla’s battery metals bill skyrockets to $100 billion

Tesla has been ramping up production at an impressive rate despite lockdowns and power issues in China and a late start in Germany, but the scale of the task is put into perspective with Musk’s proud announcement earlier this month. that the Texas-based company has now reached 3 million vehicle mark – since its first production model was launched in 2008. Tesla is expected to deliver between 1.4 and 1.5 million vehicles in 2022.

Not only has Tesla stopped work on a cheap and cheerful Model 2, crucial to achieving those lofty goals, but now new data compiled by MINING.COM shows that rising metal prices would make a mass-market Tesla more expensive. that price is almost impossible to build. and the bill of materials for 20 million vehicles a year hard to swallow even for a company that is awash in cheap capital.

Tesla's battery metals bill skyrockets to $100 billion

Combining data from Benchmark Mineral Intelligence, a London-based price reporting agency, and Toronto-based battery supply chain consulting firm Adamas Intelligence, which tracks demand for electric vehicle batteries by chemistry, cell supplier and capacity in over 100 countries, shows how much has changed since that september 2020 tweet.

Extrapolating current figures for Tesla’s sales-weighted end use of metals from the Adamas database and taking into account trends in the automaker’s battery deployment, including increased use of lithium iron phosphate batteries and future model launches, Adamas calculated the raw materials needed to produce 20 million cars and trucks (fingers crossed for the cybertruck before 2030 for everyone!) per year.

At today’s price, Tesla is committed to just over $100 billion for the 11.1 million tons of raw materials it needs to make 20 million cars.*

That represents an increase of $44.8 billion for metals entering the battery and electric motor supply chain at the time the production target was announced.

The jump is mainly due to a surprising 8-fold increase in the price of lithium during the period, which in July averaged more than $60,000 per tonne. In July, lithium represented 46% of the total cost, while in September 2020 it was only 11.6%. The persistently high price of lithium is also wreaking havoc on the economics of LFP batteries, which most EV makers want for entry-level vehicles.

Nickel made up 25% of the overall BOM two years ago, now that portion is 15.7% despite a 40% rise in the metal’s price since then.

In March-April, when battery metals hit multi-year and all-time highs, that total was $131 billion.

Lithium bar prices have retraced sharply since March (cobalt is down from a high of $92,000 to below $50,000), but through the end of the decade, most, if not all, of these commodities will likely be sold. they will become more expensive as supply struggles to keep up. ask.

As automakers (and the renewable energy sector) scramble for lithium, nickel, cobalt, graphite, rare earths, aluminium, manganese and copper, securing supply may be, in ultimately a bigger problem than costs.

To produce 20 million vehicles, Tesla alone needs more than the total volume of lithium and natural graphite produced last year, almost a third of magnetic rare earths, 36% of cobalt, etc.

No single company consumes 1.8 million tons of copper a year, not even China’s state network, and capturing a quarter of the world’s nickel may prove impossible, no matter how many times you meet with the Indonesian president.

$100 billion is a nice round number for mining companies hoping to supply the raw materials for the world’s number one electric car maker.

So is a trillion dollars when all car manufacturers are electric.

*To better reflect the market opportunity for the mining industry, the chart represents upstream prices where relevant. For example, synthetic graphite costs much more than mined flakes, and downstream value-added products like CSPG (coated spherical purified graphite) used in battery manufacturing are much more expensive still.

Also note that the kilograms that end up in each newly sold Tesla are fractions of what would have been purchased upstream; A factor that is sometimes omitted from estimates of metal requirements is the low throughput in the conversion and manufacturing process, with a not insignificant part. ending up on the floors of battery factories as so-called black mass.

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