Tesla reportedly amended its lithium supply agreement with Piedmont Lithium (PLL) on January 3, as per Electrek. The new deal guarantees lithium delivery to the American EV giant for the next three years, starting in H2 2023.
“Piedmont and Tesla have mutually agreed to amend their previous offtake agreement with the terms of this new agreement, which are binding for a three-year term and include an option to renew for another three years. Under the amended agreement, Piedmont has agreed to deliver approximately 125,000 metric tons of SC6 to Tesla beginning in H2 2023 through the end of 2025.”
Tesla and Piedmont’s announcement
Why is this important?
Lithium is among the critical minerals for Tesla’s electric vehicle offerings. That said, the automaker had ensured the raw material supply for its battery cell suppliers.
However, it has recently started internal production of its battery cells to cut costs.
Tesla and PLL’s partnership
Tesla welcomed partnerships with startup mining firms for essential minerals use in EV batteries, including Piedmont Lithium. PLL is a firm establishing a lithium project in North Carolina.
In retrospect, Tesla inked an agreement that commits PLL to supply 1/3 of its planned 160,000 tonnes of yearly spodumene lithium production for a minimum of five years.
However, PLL postponed the scheduled delivery, which was from July 2022 and July 2023. The delay is not unexpected because it frequently happens with such substantial mining ventures.
Now, Tesla and PLL’s initial agreement was amended to start in H2 2023.
“We are pleased to be able to partner with Tesla to supply lithium resources produced in North America. The electric vehicle and critical battery materials landscape has changed significantly since 2020 and this agreement reflects the importance of – and growing demand for – a North American lithium supply chain. This agreement helps to ensure that these critical resources from Quebec remain in North America and support the mission of the Inflation Reduction Act to bolster the U.S. supply chain, the clean energy economy, and global decarbonization.”
Piedmont Lithium President & CEO Keith Phillips
Remarkably, PLL’s shares increased by 4% after this announcement. Meanwhile, Tesla’s shares dropped after its Q4 delivery report on January 2.
