In its quest to usher in the era of affordable long-range electric vehicles, Tesla is attempting to significantly reduce the per-kWh battery costs. The Nevada ‘Gigafactory‘ is expected to lower manufacturing overhead for battery cells, but the company is believed to have no direct control over mining operations for lithium or other raw materials.
Previous reports suggest Tesla has attempted to secure long-term contracts at prices below current market values, essentially guaranteeing consistent large-scale demand in return for a break on the material costs.
Pure Energy Minerals earlier this year confirmed that it had established a potential supply agreement with Tesla motors, at a “predetermined price” below current market rates and “aligned with Tesla’s goal to continuously reduce the cost of its lithium batteries.”
The company has reportedly only signed deals with two companies, and neither is expected to begin volume production until 2020 or later, according to FT. One expert, Joe Lowry of consultant firm Global Lithium, argues that Tesla’s deals with small miners do not lock in low prices for the quantity of material that the automaker will need to scale up battery production.
“The current strategy seems to be no direct investment but leveraging the Tesla name by signing ‘contingent’ contracts at unachievably low prices with junior mining companies who have never produced lithium chemicals,” Lowry said.
Tesla has not yet detailed specific terms of its current contracts. The Gigafactory is expected to be up and running by 2017.
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