Tesla Inc TSLA has signed a five-year deal with Australia’s Piedmont Lithium Limited PLL for the supply of high-purity lithium ore, Reuters reported Sunday.
What Happened: Under the agreement, the Elon Musk-led automaker would obtain a third of its requirement of 160,000 tonnes-per-year spodumene concentrate from Piedmont deposits based in North Carolina, according to Reuters.
The two companies can reportedly extend the deal for another five years.
The agreement mandates that the two companies agree to begin deliveries between July 2022 and July 2023, Piedmont told Reuters.
Why It Matters: The Piedmont deal comes at the heels of the automaker’s Battery Day, held last week, where Musk revealed that Tesla had received the rights to a 10,000 acre-land for lithium acquisition.
At the same event, a new tabless battery design was also unveiled. The 4860 Battery Cell to be brought into high volume production in 2022 would allow electric vehicles to use fewer batteries and drive down manufacturing costs.
Even so, demand for batteries remains so high that Tesla and its battery partners like Panasonic Corp PCRFY, LG Chem Ltd LGCLF, and CATL put together aren’t enough to fulfill supplies, Musk tweeted before the battery day event.
Panasonic is ramping up its battery production at the Nevada Gigafactory, which is likely to boost capacity at the site by 10%, according to a company executive.
Price Action: Tesla shares closed nearly 5% higher at $407.34 on Friday and fell almost 0.4% in the after-hours session.
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