The invasion of Ukraine added more turmoil among electric car makers to nickel imports, as it is a critical component of the battery industry, which controls a large part of global production of the metal.
Sources revealed that Tesla Corporation It was already scouring the world searching for the metal, and had signed agreements with several nickel suppliers since 2021.
These agreements include a long-term supply deal for a number of years with the giant mining company Vale SA, an agreement that has not been announced, and covers the company’s needs for nickel from Canada, according to Bloomberg, citing sources, and seen by Al Arabiya.net.
Unlike most rival automakers, Tesla has spent years focusing on how to secure its nickel supply.
These efforts are part of CEO Elon Musk’s focus on vertical integration to maintain control of Teslas supply chain.
Tesla jointly operates a large battery-cell plant in Nevada with Japan’s Panasonic, although it buys batteries from some other major suppliers.
“What it (Tesla) has done with the nickel is a hidden competitive advantage,” said Gene Munster, managing partner at Loup Ventures, noting that Tesla continues to be two steps ahead of the rest.
Musk has repeatedly indicated that nickel supply is the company’s biggest concern as it boosts production, and availability of the metal is a concern throughout the electric car sector.
According to Bloomberg Intelligence, the demand for nickel in the battery industry could jump to about 1.5 million tons in 2030 from 400,000 tons today.
“Please mine more nickel,” Musk urged producers in an earnings call two years ago. “You’ll be giving (Tesla) a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.”
Sanctions imposed on Russia over its invasion have increased urgency, as the country holds about 17 percent of the world’s reserves of Class 1 refined nickel, the type needed for electric vehicles.
Since the invasion of Ukraine, the price of nickel has increased by 30%, but the price had risen 3 times in two days during that period due to “margin cole”, before returning to decline.
Teslas deal with Brazil’s Vale is one of several the automaker has struck over the past year.
In January, the electric vehicle manufacturer committed to purchasing 75,000 metric tons of concentrated nickel from the Talon Metals Corp project being developed in Minnesota.
This followed agreements with BHP Group, the world’s largest mining company, for materials from Australia. Tesla also entered into an agreement with operators of a nickel mine on the South Pacific island of New Caledonia.
In turn, Vale said it had plans to increase its sales of electric cars to between 30% and 40% from 5% currently.