Tesla reveals its battery supply chain that includes nickel price hedges and a solid-state module maker

Tucked in Tesla's just-released environmental impact report for last year, a supply chain assessment table revealed the EV maker's current raw battery material and component suppliers that have only been a subject of rumors or speculation so far. The most important takeaway from the Tesla battery supply chain list is that it includes the Brazilian mining giant Vale in the nickel category. Previously, there were rumors that Tesla has hedged its nickel bets by entering a long-term contract with Vale and the mining company just confirmed the relationship in a press release.

Vale notes the disclosure by Tesla Inc today and confirms it signed a long-term contract with Tesla Inc to supply Class 1 nickel in the United States from its operations in Canada. This agreement is in line with our strategy to increase exposure to the electric vehicle industry, leveraging our low-carbon footprint and market-leading position as North America’s largest producer of finished nickel.

The price of nickel, which is the main component of the cathode in long-range and performance electric vehicle model batteries, skyrocketed after Russia, one of its major producers, invaded Ukraine. At the time, independent analysts said this would add about US$1580 to EV production costs going forward. Tesla has the highest profit margins per car in the industry and wants to keep it this way by both transferring the increased costs to its customers by increasing its EV prices, and keeping said costs in check further by hedging its battery raw material bets. 

The list of such hedges goes on, as Tesla's battery sustainability report table includes the long-term contract with Ganfeng, the world's largest supplier of battery-grade lithium, as well as a number of other nickel and cobalt suppliers. Ganfeng Lithium already has what it calls a "solid-state lithium battery module" in its portfolio that has already been used in an EV commercial fleet for the first time, so that relationship and further refinements of its technology may benefit Tesla as well.

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