Tesla has inked a lithium supply agreement with Yahua Lithium Co., Ltd., a subsidiary of China-based Yahua Group, on June 19, 2024. The deal, which covers the period from 2025 to 2027, will see Tesla purchasing lithium carbonate products from Yahua. However, the pricing details for the lithium products have yet to be finalized.
Yahua Lithium Co., Ltd., also currently supplies lithium hydroxide to Tesla under an existing contract from 2021 to 2025, valued at RMB 5.6 billion. This agreement stipulates that Tesla will receive a supply of 301,000 tonnes of lithium hydroxide from 2023 to 2030.
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The new lithium supply agreement with Yahua is expected to support Tesla’s production at Giga Shanghai and cater to vehicles destined for markets outside the United States. Tesla has been strategically strengthening its global supply chain to bolster localized production.
In the U.S., Tesla has partnered with Piedmont Lithium, which recently obtained approval to commence mining operations in North Carolina earlier this year.
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The sourcing of battery minerals has become a crucial factor for electric vehicles (EVs) sold in the U.S., particularly for qualifying for the Inflation Reduction Act’s (IRA) EV subsidies, which range from $3,750 to $7,500. Notably, the U.S. government has identified China, Russia, North Korea, Iran, and other nations as countries of concern.
This classification implies that Tesla would be ineligible for the IRA’s EV tax credits if it were to utilize minerals from China in its batteries.
