Electric car superstar Tesla will need to come up with $100 billion to purchase the metals required to reach a 2020 Elon Musk-set goal of producing 20 million cars per year, new data analysis shows.
Because of ballooning core inflation, especially for producers, the figure is almost double from the $44.8 billion it stood at when Musk set the goal in a September of 2020 tweet.
At the time, Musk stated he wanted to see his company achieve this figure by 2030.
To put the mark in perspective, according to Tesla’s Q2 Financial Statements released on July 20, the carmaker has produced 563,987 vehicles worldwide thus far in 2022, the majority of which are produced at the Shanghai and California Gigafactories.
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Q2’s data also amounts to a 25 percent year over year increase.
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The cost calculation for the company’s metals bill was reported by industry outlet Mining.com on Aug. 27 based on data from London-based Benchmark Mineral Intelligence and Toronto’s Adamas Intelligence.
The pair calculated that Tesla would require 11.1 million tonnes of raw materials to produce 20 million cars.
The outlet explained that the doubling in materials costs is “mostly on the back of an astonishing 8-fold rise in the price of lithium over the period, which in July averaged more than $60,000 per tonne. In July, lithium made up 46% of the total cost while in September 2020 it was only 11.6%.”
Mining.com also explained that the $100 billion figure is actually down 30 percent from $131 billion just months ago when nearly all commodities markets were in stage one of an impending supercycle, which has since abated.
“As automakers (and the renewable energy sector) scramble for lithium, nickel, cobalt, graphite, rare earths, aluminium, manganese and copper securing supply may ultimately be a bigger issue than costs,” the article reads.
But the most fundamental problem, the article states, is that for Tesla to produce 20 million cars under current levels of technology, it would require more lithium and graphite than what was produced worldwide in 2021, a third of all “magnet rare earths,” and 36 percent of the world’s cobalt production.
Some aspects of the supply issue are being worked on by Tesla and Musk, however. On Aug. 11, Fortune Magazine reported that the firm had reached an agreement with the government of Indonesia to buy $5 billion worth of nickel over the next five years.
Fortune stated that Indonesia holds almost a quarter of the world’s reserves of the metal.
A 2021 article, also by Mining.com, explains that each Tesla produced uses approximately 45 kilograms of nickel, and would require 30 percent of global supply to meet its 20 million cars per year goal.
“Put another way, Tesla will have to buy the entire output of the top 6 producers – Norilsk, Vale, Jinchuan, Sumitomo, Glencore, BHP, and then some,” the article read.
And added, “Or build the equivalent of 23 mines like Sumitomo’s Ambatovy mine in Madagascar – at $8.5 billion a pop.”
A March article by CNBC on the topic cited Benchmark Mineral Intelligence consultant Mark Beveridge stated that battery technology was “heading towards” a technological landscape where “90 percent of the cathode being nickel for certain specific cell types.”
The article added that U.S. mining sites are exceptionally limited, with the big one being Michigan’s Eagle Mine, which is anticipated to shutter in 2025.
There is also the planned Tamarack Mine in Minnesota, a joint venture between Talon Metals and Rio Tinto, but that endeavor is a long ways off from bearing fruit, as it has yet to even complete the permitting process, the article states.
CNBC added, “The project pipeline for new, high-grade nickel mines has largely dried up, and communities often push back against proposals for new mining projects.”
It cited a lawyer, Paula Maccabee, representing an environmental activism group called WaterLegacy, whose statements summed up a critical problem with domestic mining operations and the need for a national import model.
Maccabee asked, “How much nickel will be getting into our drinking water? Where will that toxic nickel go when an underground mine has gaps and fissures?”