Tesla signs agreement to get key battery component outside China

Tesla will acquire the graphite from the company's Vidalia, Louisiana, production site, which receives graphite from its mine in Balama, Mozambique.

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Tesla Elon musk
(Photo by Brendan Smialowski/AFP via Getty Images)

Elon Musk’s Tesla is heading to Mozambique for a necessary part in its electric vehicle batteries, in what experts are saying is a first-of-its-kind partnership intended to minimize the company’s graphite reliance on China.

Last month, Elon Musk’s business inked a deal with Syrah Resources, an Australian company that handles one of the world’s biggest graphite mines in South Africa.

It’s a one-of-a-kind partnership between an electric car maker and a producer of an essential component for lithium-ion batteries. The deal’s value hasn’t been announced.

Tesla will acquire the graphite from the company’s Vidalia, Louisiana, production site, which receives graphite from its mine in Balama, Mozambique.

According to the deal, the Austin, Texas-based electric carmaker would purchase up to 80% of the plant’s output of 8,000 tonnes of graphite per year beginning in 2025. Syrah must establish that the material matches Tesla’s requirements.

According to Simon Moores of Benchmark Mineral Intelligence, a UK-based battery components data and intelligence service, the agreement is part of Tesla’s effort to scale up its potential to produce its own batteries so it can decrease its dependency on China, which controls global graphite markets.

Moores said

It starts at the top with geopolitics. The U.S. wants to build enough capacity domestically to be able to build (lithium-ion batteries) within the USA. And this deal will permit Tesla to source graphite independent from China.

Moores feels that building the batteries in the United States would ease some of the worries Tesla has about its connections to China, where certain mines are causing environmental issues.

The carmaker has also opened a showroom in Xinjiang, where the Chinese government is alleged of compelling Muslim ethnic minorities into hard labor and other human rights violations.

Tesla’s public relations staff has been dissolved, hence a message was left seeking feedback.

Tesla’s strongest global marketplace, however, is China. It has a huge facility outside Shanghai, where it sells approximately 450,000 automobiles every year, compared to approximately 350,000 in the United States, according to Abuelsamid.

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