Musk wants mining companies to mine more nickel

Musk wants mining companies to mine more nickel

August 8, 2020 0 By autotimesnews

The head of Tesla has promised to award a major contract to mining companies that will provide the company with large volumes of mined nickel. Musk believes the current cost of battery components is holding back Tesla’s sales growth. The increased supply of nickel in the market, he hopes, will eventually lead to lower battery prices and make Tesla cars more affordable. Analysts believe that Musk’s dreams are not destined to come true – the nickel market, on the contrary, expects further price increases.

Tesla is currently receiving nickel-cobalt-manganese batteries from LG Chem and nickel-cobalt batteries from Panasonic Corp. For the automaker, which recently faced impressive growth in demand for the Model 3, two suppliers were not enough, so Musk decided to come up with a new statement, according to Reuters.

“Tesla will give you a giant long-term contract if you mine nickel efficiently and environmentally,” Musk said.

Musk added that Tesla plans to significantly increase the range of new electric vehicles with energy-intensive lithium iron phosphate batteries. This approach will free up some of the nickel-based lithium-ion batteries for Tesla’s alternative projects. It is not clear what kind of programs we are talking about, but it can be assumed that the head of Tesla was talking about Megapack solar installations and energy storage stations.

Traders and analysts believe that the volumes Tesla will need will fail to convince potential investors to fund an increase in nickel production. Nonetheless, the same analysts predict that EV makers will become major customers of mining companies in the next few years. Thus, someday the situation will change dramatically, but Musk will have to wait.

According to Wood Mackensie’s forecast, nickel demand for electric vehicle batteries will grow 64% between 2019 and 2025.

“Musk needs nickel right now, and he hopes prices will fall. But prices will not change in the short term as the market is in surplus, ”said Wood Mackensie.