Tesla May Have To Get Into The Mining Industry!
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Elon Musk, the CEO of Tesla Inc., hinted that the electric vehicle company may soon begin mining for lithium, nearly two years after announcing a plan to do so, owing to the increasing cost of battery metal.
Lithium has not escaped the volatility of commodities in the aftermath of Russia’s invasion of Ukraine. Even before the conflict, raw material costs rose as demand soared and supplies were clogged owing to pandemic-related supply chain problems. Benchmark Mineral Intelligence’s worldwide lithium pricing index has increased by about 490% in the last year. China is so concerned about the price of lithium that in March it invited a number of market participants for two days of meetings aimed at preventing a rapid price hike.
Because lithium is a critical element in electric car batteries, manufacturers are scrambling to obtain supplies, anticipating a jump in demand as a result of the worldwide effort to electrify mobility. In recent years, Tesla has signed supply agreements with battery metals manufacturers, including one with mining behemoth Vale SA.
Following the lithium cost surge, China has so far communicated to its electric car battery supply chain that it wants lithium prices to revert to reasonable levels, as rising costs have created rising costs for producers and threatened to harm consumer demand.