As lithium price increase on the global market, Tesla Motors benefits of contract with local supplier.
The need for lithium to power the future has caused Some refer to lithium as the "new gasoline" or "white petroleum" due to the increasing need for lithium to power the future. In order to safeguard its battery production capacity for up to five years, Tesla Motors has been proactive about securing long-term supplies of lithium.
Tesla CEO Elon Musk said last year that the company would need to use the entire world's lithium production in order to manufacture a half million cars per year. However, lithium demand is increasing worldwide and for Tesla it may become difficult to secure its supply needs.
According to the publication Teslarati, the best lithium supply in the world is located at present just three hours away from Tesla's Gigafactory, in the Clayton Valley area of Nevada. The lithium deposit there is easier to extract and process, being dissolved in salt brine.
Tesla made a deal last year with Pure Energy Minerals in order to get access to the high-quality lithium from the Clayton Valley area. According to Fortune, the "early stage agreement" would allow Tesla to purchase lithium at a price "below current market rates".
In the lithium market, Tesla has to compete with another major player, China. At the end of the year 2015, in China, the price of lithium doubled to $13,000 a ton. According to The Economist, on the spot market, some companies have paid since then as much as $23,000 a ton.
At the same time, manufacturers around the world have projects to build electric and plug-in hybrid vehicles. More demand is increasing lithium price. Market experts predict that, because of the increased number of electric vehicles, by 2025 the lithium market could triple in size.
Now, researchers at the University of Wyoming announced that they have discovered a huge deposit of lithium near the Rock Springs Uplift. Tesla might further benefit of the local supplies of lithium to secure its battery production at the Gigafactory.
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