Tesla (NASDAQ: TSLA) CEO Elon Musk has said that it was not “out of the question” for the company to enter the mining business, as the world’s largest electric vehicle (EV) manufacturer looks to tackle raw material constraints.
In a keynote interview at The Financial Times Future of the Car summit, Musk said that the demand for raw materials is exceeding production “to a ridiculous degree.”
“If that’s the only way to accelerate the transition [to sustainable energy], then we will do that,” Musk said in response to a query about whether Tesla would buy a mining company.
“We will just tackle whatever set of things that are needed to accelerate sustainable energy… doing mining and refining or buying a mining company, provided that we can change that mining company’s trajectory significantly, are possibilities,” he added.
The demand for EVs has surged as the world aims to meet its net-zero goals by 2050. But a shortage in supply of battery metals like lithium and nickel have swelled metal prices.
A Tesla super charging station in Switzerland. Credit: makasana/iStock.
Tesla aspires to sell about 20 million EVs annually by 2030, but Musk expects raw material constraints in lithium and cathode (nickel and iron phosphate) production. “This is not a question of shortage … it’s really the equipment necessary to convert the ore to battery grade materials that’s one of the problems on the way to getting 20 million vehicles,” he said.
While the demand for Tesla vehicles exceeded production even before the supply crunch, Musk said that the current situation was a lot worse and that the company might have to limit or “stop taking orders for anything beyond a certain period of time.”
Tesla has spent the past year signing pacts with several producers of battery metals, with a particular emphasis in nickel and lithium.
Earlier this month Vale (NYSE: VALE), the world’s top nickel and iron ore producer, inked a long-term deal with Tesla to supply nickel from its operations in Canada.
It also signed nickel supply deals with the world’s largest miner, BHP (ASX: BHP) in Australia, with Prony Resources in New Caledonia in 2021 and with Talon Metals (TSX: TLO) for its Tamarack nickel project in Minnesota, US in January.
Nickel helps cram more energy into cheaper and smaller battery packs, allowing EVs to charge faster and travel farther between plug-ins.
In November 2021, the company signed a new contract with Ganfeng Lithium, China’s top producer of the battery metal to supply Tesla with battery-grade lithium hydroxide products for three years starting in 2022.
Be the first to comment on "Elon Musk says buying a mining company ‘not out of the question’ "