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Mining Giant and Tesla Agree on a Nickel Deal: Will Tesla Make its Own Batteries?

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Tesla has raw materials agreements for lithium, cobalt, and nickel on its path to making its own lithium-ion batteries.

The world of lithium-ion batteries for electric vehicles (EVs) is moving fast. EV makers are scrambling to find battery manufacturers that can meet their demand for high-energy cells, and battery makers are facing shortages of lithium, nickel, and cobalt as mining and mineral extraction companies struggle to add capacity.

One way for an EV maker to break the dependence on battery companies is to integrate the batteries into its manufacturing process. Tesla seems on course to do just that. The company has already made agreements with mining and extraction companies to provide lithium and has an agreement with Glencore to supply cobalt. The Australian mining company BHP, who claim to be one of the most sustainable and lowest carbon emission nickel producers in the world, has announced an agreement to supply Tesla with nickel from its Nickel West asset in Western Australia.

During Tesla’s second quarter earnings call in 2020, Tesla’s Elon Musk stressed the need for mining companies to mine more nickel.

“Demand for nickel in batteries is estimated to grow by over 500 percent over the next decade, in large part to support the world’s rising demand for electric vehicles,” BHP Chief Commercial Officer, Vandita Pant, said in a company news release. “We are delighted to sign this agreement with Tesla Inc., and to collaborate with them on ways to make the battery supply chain more sustainable through our shared focus on technology and innovation,” she added.

BHP says that it will also collaborate with Tesla on opportunities to lower carbon emissions in its operations through increased use of renewable energy paired with battery storage.  “BHP produces some of the lowest carbon intensity nickel in the world, and we are on the pathway to net-zero at our operations,” said BHP Minerals Australia President, Edgar Basto. “The investments we have made in our assets and our pursuit of commodities like nickel will help support global decarbonization and position us to generate long-term value for our business,” Basto added.

With Tesla locking down raw material supplies of lithium, cobalt, and nickel from mining and extraction companies, the rumors that the automaker will soon be making its own battery cells, independent of any of the giant battery companies, seem like they could be on track.

Kevin Clemens is a Senior Editor with Battery Technology.

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