Tesla (TSLA) signs nickel supply agreement with Talon for battery cells

You’re here TSLA recently signed its first nickel supply agreement in the United States, selecting Talon Metals Corp’s Tamarack mine project in Minnesota with the goal of manufacturing electric vehicle (EV) battery metal in a sustainable manner.

Concerns about climate change have peaked in recent times. This requires the development of electric vehicle batteries to decarbonize the global economy, stimulating demand for metals, especially copper and nickel, used to produce batteries. An expected increase in demand for nickel is predicted over the next decade, as electric vehicles gain momentum and gain in popularity. Nickel improves the energy storage capacity in the cathode of a battery, thus extending the range of an EV.

Tesla‘s announcement comes in light of demands for climate change. The company is driven by its vision to accelerate the transition to green transportation solutions. Tesla CEO Elon Musk since 2020 has been insisting on increasing nickel production in an environmentally sustainable manner.

The United States, so far, has not performed well in nickel production. Indonesia is the world’s largest producer of nickel. However, miners there mainly use energy-intensive technologies to extract the metal and engage in controversial waste disposal practices, including dumping waste rock into waterways. The Talon project in Minnesota is a joint venture with Rio Tinto. It secures a key US source of metal for Tesla battery factories in Texas and Nevada while reducing the company’s supply lines. It is expected to start by 2026.

Talon plans to use technology that can suck carbon dioxide from the atmosphere and chemically bind it. This allows for permanent storage of gas in rocks found inside Talon’s Tamarack project in northern Minnesota. The process, still in the testing phase, would allow Talon to market carbon neutral nickel, which will represent a big ticket for Tesla in the field of electric vehicles.

Tesla plans to purchase 75,000 tonnes of nickel concentrate over the next six years, along with smaller quantities of cobalt and iron ore, at prices listed on the London Metals Exchange. However, it is unclear where Tesla will refine the nickel concentrate because the United States does not have a nickel refinery.

Last year, the EV Magnet signed a similar nickel supply agreement with BHP Group BHP in Australia to secure the nickel supply to the latter’s Nickel West mine.

The alliance forced Tesla and BHP Group to join forces to build a more efficient battery supply chain. The companies have leveraged blockchain technology for the sourcing and production of raw materials and identified the supply chain partners that best fit their vision and battery value chains. BHP and TSLA have also partnered on sustainable solutions for energy storage aimed at reducing carbon emissions.

Tesla’s commitment to a defined future for electric vehicles and its focus on sustainability naturally makes it the clear leader in electric vehicles.

Tesla shares have risen 30.4% in the past year compared to the industry’s 7.8% growth.

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