Tesla inks deal with this country to access key battery components for EVs

Tesla is turning towards Mozambique for a key component in its electric vehicle batteries. Analysts see this move by the EV major as first-of-its-kind to reduce its dependence on China for graphite.

The company shared that it will buy the material from the company's processing plant in Vidalia, Louisiana, which sources graphite from its mine in Balama, Mozambique. According to the agreement, Tesla wants to buy up to 80 per cent of the plant's production which can be around 8,000 tons of graphite per year starting 2025.

This deal is part of Tesla's plan to increase its capacity to manufacture its own batteries and reduce its dependency on China, a country that dominates global graphite markets, stated Simon Moores of United Kingdom-based battery materials data and intelligence provider, Benchmark Mineral Intelligence. Moores added, “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."

The battery industry is currently facing a shortage in the supply of graphite in recent months, informed Moores. And as every major automaker is racing to get into electric vehicles, Tesla which is manufacturing almost a million electric cars per year, sourcing enough batteries are becoming the biggest constraint.

The company also signed an agreement last month with Australia's Syrah Resources, which operates one of the world’s largest graphite mines in the southern African country. Tesla is establishing a new battery factory in Austin, Texas to get closer to self-sufficiency. It also has an agreement with Panasonic to make battery cells at the automaker's battery factory near Reno, Nevada.

(With inputs from AP)