Tesla To Source Over $1B Worth Of Key Battery Materials From Australia Each Year

Tesla Inc TSLA expects to spend more than $1 billion annually over the next few years to source key battery materials from Australia due to its reliable mining industry and responsible production practices, Reuters reported on Wednesday. 

What Happened: Tesla, like its rivals, is rushing to develop supply chains and secure raw materials for its electric vehicle batteries. The automaker already sources three-quarters of lithium and over a third of its nickel feedstock from the mineral rich Australia.

"Australian mining companies do have a good reputation, great expertise, professionalism and are preferred by manufacturers increasingly concerned about meeting both today’s and the future’s ESG requirements,” Robyn Denholm, chair of the U.S. carmaker, said at a Minerals Council of Australia event.  

The increased sourcing spend also relies on U.S. allies to supply the bulk of the metals needed to build electric vehicles as per a new policy direction under President Joe Biden's Administration.

See Also: Tesla Seeks To Improve Supply Of Low-Cost Batteries In Deal With China's EVE Energy

Why It Matters:  Australia's hard rock lithium export is expected to hit A$1 billion ($773 million) in 2021, while the nickel exports are expected to be valued at A$4 billion ($3.09 billion), the report noted — citing government data.

Musk, in response to the Reuters article on Twitter, said Australia is where Tesla gets most of its lithium. 

Tesla had last year secured a five-year deal with Australia’s Piedmont Lithium Limited PLL for the supply of high-purity lithium ore. In March Tesla secured a nickel supply deal to buy the mineral from the Goro Mine in New Caledonia with Brazilian mining company Vale. 

Tesla CEO Elon Musk has previously said it plans to move away from batteries with nickel cathode due to supply constraints, forcing the company to shift its standard-range EV models to iron cathode. 

Nickel is the preferred option for EV batteries due to its higher energy density and greater storage capacity.

Price Action: Tesla shares closed 3% lower at $605.12 on Tuesday and were further down 0.5% in after hours.

Click here to check out Benzinga's EV Hub for the latest electric vehicles news.