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Future of Tesla being Squared off Against China by Elon Musk

Future of Tesla being Squared off Against China by Elon Musk
Tesla would require unprecedented quantities of metals like Lithium, Nickel, Cobalt and Aluminum to reach an ambitious goal - producing 500,000 electric vehicles a year by 2018. These metals are used to make lithium ion batteries.
The 373,000 preorders for the Model 3 sedan has prompted Tesla CEO Elon Muck to fix the target fixed two years earlier than originally planned. The company has announced start of delivery of the vehicles in late 2017.
Ion 2014 Tesla had said it would produce more lithium ion batteries annually by 2020 than were produced worldwide in 2013. The reduced time period doesn’t leave much time to create a complex supply chain that includes expanded mining and exploration operations for Tesla.
Carmakers in China, where the government wants 5 million electric and other new-energy models on the road by 2020 and consumer-electronics companies, which use the batteries in everything from mobile phones to laptops are pitted against Tesla.
“The world is going to need a lot more lithium ion batteries. Tesla knows that it’s going to have to source the raw materials themselves, and they are competing with China. They need to invest in new supply, and they are conducting a global search,” says Simon Moores, a managing director at Benchmark Mineral Intelligence.
More than 7,000 battery cells, which Tesla developed with Japan’s Panasonic, is present in Tesla’s Model S sedan which starts at $66,000 before federal or state incentives. High-capacity battery with enhanced energy density is the next attempt of bht the companies. The more hours of power packed into a car’s battery, the more miles a vehicle can travel on a single charge and this is helped determined by Energy density, measured as kilowatt hours per kilogram.
Formulations including lithium, nickel, cobalt, and aluminum oxide are typically used for its batteries by Tesla. The company is recruiting staffers to scour the globe to find a steady and affordable supply of these materials which is key to keeping the base price of the Model 3 at about $35,000.
According to researcher CRU Group, Tesla is competing for the metal with companies in Asia, where China, Japan, and Korea account for more than 85 percent of current lithium ion battery output.
“Tesla has spent a lot of time working with all the different lithium companies,” including some tiny startups, JB Straubel, the chief technology officer, said at the shareholder meeting.
Before turning to a slight surplus in 2017 and 2018, lithium market will show a deficit of about 4,500 metric tons estimates Macquarie Research. Macquarie predicts that there would be a global shortage of almost 46,000 tons, equal to 16 percent of total demand, by 2021 due to deficiency of any significant new supply coming online.
“The main determinant of the cost of the cell is the price of nickel in the form that we need it,” said Muck at a May 31 meeting. After Indonesia, the biggest producer of the mined metal until 2013, announced it would ban the export of all unrefined ores, prices in May 2014 surged past $21,000 a metric ton. However as other countries, notably the Philippines, increased output and stockpiles remained near record highs, prices have plummeted more than 50 percent, to about $9,190 a ton on June 21.
Aluminum is one metals for which Tesla is unlikely to see shortages or higher costs. The world’s biggest producer and consumer of aluminum is China with 55 percent of the metal’s output last year. Partly to avoid massive job cuts and losses at banks that sank huge loans into smelting facilities, production in China has continued at a steady pace despite a global glut.

Christopher J. Mitchell

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