Tsingshan's Threat to Tesla: EV Maker Is In Battery Crosshairs
Tesla's battery costs may soon increase because lithium and nickel miners are taking on additional costs to produce more refined products. Tesla's LFP battery usage is an important development in this regard because it uses materials like iron, which is more widely available as a mineral. But, according to Nikkei Asia, Tsingshan Holding Group, the Chinese metals giant, has reportedly begun talks with several copper plants to shift their focus to making refined nickel. And new lithium supplies are coming from countries including Australia, Argentina and Brazil.
As the competition to produce raw materials for electric vehicle batteries heats up, Tesla finds itself caught in the crosshairs. The softening markets for critical commodities such as lithium and nickel are putting a strain on the electric vehicle giant's supply chain, and the high cost of expansion efforts by suppliers is threatening to drive up the price of Tesla's cars. The push by Western countries to secure battery raw materials from non-Chinese sources is adding to the pressure, and the future of Tesla's car production is in jeopardy. With the battle for battery raw materials intensifying, the world watches and waits to see how this crisis will affect the future of electric vehicles, and Tesla's place in the market.
Nikkei also reports that the softer prices of electric vehicle battery minerals reflect concerns about a slowdown in electric vehicle demand, and that electric carmakers like Tesla and Ford are already lowering EV prices to appeal to consumers dealing with rising inflation and interest rates. Until this year, they were able to pass on higher raw material costs to customers.
Now, where is Tesla in this picture? Tesla is aware of the challenges facing the lithium and nickel markets. While fluctuating commodity prices are a natural part of any market, Tesla seems confident in its ability to secure the raw materials needed to produce high-quality electric vehicles. Tesla’s strong relationships with a diverse group of electric vehicle battery material suppliers, as well as its own investments in recycling and sustainable mining practices, help ensure a stable supply chain for the future.
One trader told Nikkei that battery material "miners are still eager to develop more amid relatively high prices,." Another said, "We should brace for what could happen when lithium prices fall, and interest rates stay high."
I think Tesla understand that some traders may be concerned about the potential for falling lithium prices, but I also think Tesla believes that the demand for electric vehicles will continue to grow, driving demand for the raw materials required to produce batteries. This, combined with Tesla’s commitment to responsible sourcing and sustainable production practices, gives the electric vehicle maker confidence in the long-term viability of its supply chain.
Also, as Tesla works towards its goal of sustainable energy for all, it remain focused on delivering the highest-quality products to its customers, regardless of market conditions. What will happen next? I think Tesla will continue to monitor the situation and take any necessary steps to ensure the stability of its supply chain and the affordability of its vehicles for years to come.
Armen Hareyan is the founder and the Editor in Chief of Torque News. He founded TorqueNews.com in 2010, which since then has been publishing expert news and analysis about the automotive industry. He can be reached at Torque News Twitter, Facebok, Linkedin and Youtube.