signed new contracts with two of its current Chinese battery material suppliers, Bloomberg reported, highlighting the extent to which American electric vehicle manufacturers rely on China for critical minerals and materials.
Zhejiang Huayou Cobalt Co. and CNGR Advanced Material Co. renewed pricing agreements to provide Tesla with supplies of ternary precursors, chemical concoctions essential for lithium-ion batteries to store energy for electric cars, up until the mid-2020s, according to Bloomberg. China dominates the world’s lithium-ion manufacturing market, producing about 79% of all lithium-ion batteries that entered the global market in 2021.
Huayou Cobalt will supply Tesla with processed cobalt for batteries from July 1, 2022, to the end of 2025, and CNGR will supply Tesla with lithium battery cathode material precursors from 2023 to 2025, according to Bloomberg.
China dominates the refinement and mining of cobalt, a mineral essential for the production of EVs, accounting for 50%-70% of the global supply of lithium and cobalt, according to a 2021 International Energy Agency report.
Tesla’s annual production rate of roughly 2 million electric vehicles means that the manufacturer’s demand for materials like ternary precursors is heavy, and the agreement with Chinese suppliers is necessary to achieve this goal. Tesla aims to grow at a rate of about 50% per year, which also will require a massive amount of battery materials to sustain.