American electric automaker Tesla has just secured a long-term lithium carbonate supply from a subsidiary of Yahua Industrial Group in China, according to Yicai Global.
Tesla, Yahua sign lithium contract
Tesla formally inked a lithium supply agreement with China-based Yahua Lithium Ya’an on June 19, 2024.
As part of the agreement, Tesla will acquire its lithium carbonate demand from Yahua Lithium Ya’an from 2025. The contract will end in 2027, with a potential extension to the end of 2028.
For context, lithium carbonate is a raw material necessary for lithium battery cathode production.
Following the news, the Chengdu-based company witnessed a 1.7% share increase at CNY9.67 (USD1.33) apiece on Thursday’s close. In contrast, the broader Shenzhen stock market dropped 1.6%.
Existing partnership
In hindsight, Tesla and Yahua Industrial Group had already teamed up in December 2020.
At the time, the two companies inked a $880 million lithium hydroxide supply deal for five years. In August 2023, they extended the contract by seven and a half years.
As of the end of 2023, Yahua had supplied CNY5.8 billion ($799 million) of lithium products to the American electric vehicle giant.
The extended partnership demonstrates Tesla’s confidence in the quality of Yahua’s lithium products and its capability to sustainably advance in the industry, Yahua reportedly stated. In addition, the company also emphasized that the partnership will aid its growth amid the shift to electric mobility.
Establishing a strong global supply chain
Yahua’s lithium supply will likely support Tesla’s electric vehicle production in Gigafactory Shanghai.
Considering the restrictions of the Inflation Reduction Act, these EVs might not be available for purchase in the US market. Tesla’s supplier in the US is Piedmont Lithium.
Nonetheless, the partnership with the Chinese lithium supplier aligns with Tesla’s efforts to establish a solid supply chain worldwide for its electric vehicles.
