Tesla Secures Long-Term Supply Of Nickel For EV Batteries

Tesla Inc TSLA secured a nickel supply Thursday for use in its electric vehicle batteries after the New Caledonia government reached an agreement with Brazilian mining company Vale for the sale of its Goro Mine.

What Happened: Tesla has secured greater control over its battery metal supply chain with an agreement to buy nickel from the Goro Mine in New Caledonia.

Nickel is an important metal in the production of lithium-ion batteries used in electric vehicles and Tesla CEO Elon Musk has expressed concern recently over its availability.

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As part of the agreement with the government of New Caledonia, Tesla will have access to a long-term supply of nickel from the mine and will sit as a technical advisor on the project, according to a Financial times report.

Why It Matters: Nickel cathodes give density to lithium-ion batteries that's needed to provide a longer charge and greater driving range for EVs.

New Caledonia mines 25% of the world’s nickel and the Goro mine has one of the largest reserves, capable of producing approximately 40,000 tonnes of nickel per year.

Although Musk recently said Tesla was “shifting standard range cars to an iron cathode” on Twitter, this partnership makes it look as though the company still sees nickel as a better option.

“Nickel is the cheapest and the highest energy density metal,” said Drew Baglino, senior vice-president for Tesla’s Powertrain and Energy Engineering division, at Tesla’s Battery Day Event last year.

What’s Next: The sale of the Goro mine has caused violent political unrest to unfold on the South Pacific group of islands.

Now an agreement for the sale has been reached in which 51% of the project will be owned by state entities.

“We’ve actually had our cells in packs driving cars for several months. Prototypes are trivial, volume production is hard,” Musk said in response to a question regarding nickel on Twitter last year.

A New Caledonia landscape.