Image: Tesla

Tesla continues to increase lithium purchases. The company extended its current contract with the Chinese industrial group Yahua for another five years until 2030, and significantly increased the volume of purchases.

Tesla is increasing its car production by about 50% every year. This requires an increase in the number of batteries. In turn, this requires even more materials for their production. Lithium is one of the key components for battery production, so Tesla needs a lot of it.

The renewed contract with Yahua provides for the purchase of a total of 207,000 to 301,000 tons of battery lithium hydroxide between August 1, 2023 and December 31, 2030. The previous contract provided for the supply of 63,000 and 88,000 tons over five years until 2025. However, it is worth bearing in mind that the new supply of up to 301,000 tons applies to the entire duration of the contract, and not just to the renewal period.

Yahua said the number of deliveries per year during the contract period, as well as the prices for deliveries, will be determined by mutual agreement. This agreement is more of a framework agreement, which means the companies will continue to cooperate if they agree on terms.

Tesla is one of Yahua's biggest customers. Tesla purchased 2.4 billion yuan ($370 million) in materials in 2022, according to a Chinese financial report. This represents 17 percent of Yahua's total sales.

Yahua currently produces up to 73,000 tons of lithium salts per year at its plant in Sichuan, China. This includes lithium hydroxide and lithium carbonate compounds for batteries. By the end of 2025, production capacity should be more than doubled to 173,000 tons.

© 2023, Eva Fox | Tesmanian. All rights reserved.

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