Piedmont to supply Tesla with lithium in second half of 2023

Image: Tesla

Piedmont Lithium has negotiated an amended supply contract with Tesla. Under the new contract, Piedmont Lithium will supply approximately 125,000 tonnes of spodumene concentrate (SC6) to Tesla between the second half of 2023 and the end of 2025 but not from its own mining operations as planned.

The new contract replaces the agreement between the two companies that was concluded in 2020 and then indefinitely postponed. The new agreement also provides for the option to extend the contract by another three years. The price has not yet been finalised, as it will be determined by a formula-based mechanism “linked to the average market prices for lithium hydroxide monohydrate during the term of the agreement”.

There is one crucial change in the new contract: Piedmont’s lithium mineral for Tesla will not come from North Carolina, as initially planned, but from Canada, where Piedmont Lithium has signed an offtake agreement with Sayona Quebec.

The agreement, signed in September 2020, actually called for Piedmont to begin supplying Tesla sometime between July 2022 and July 2023. This was to be spodumene concentrate (SC6) from the Piedmont deposit in North Carolina. Tesla was supposed to receive around 53,000 tonnes per year. In the meantime, delays and non-issued permits in the mining project made it impossible to supply Tesla.

So now the SC6 will not come from the USA, but still from North America. This is important for the changed EV subsidy in the US, which in future will require increasing shares of battery materials to come from the US or countries with free trade agreements for a vehicle to be eligible.

“We are pleased to be able to partner with Tesla to supply lithium resources produced in North America,” said Piedmont Lithium President and CEO Keith Phillips. “The electric vehicle and critical battery materials landscape has changed significantly since 2020, and this agreement reflects the importance of – and growing demand for – a North American lithium supply chain. This agreement helps to ensure that these critical resources from Quebec remain in North America and support the mission of the Inflation Reduction Act to bolster the U.S. supply chain, the clean energy economy, and global decarbonisation.”

Tesla manufactures 4680 cells at its Kato pilot line in Fremont and at Giga Texas. In December 2022, Tesla reached a weekly production of 868,000 round cells in the process, enough to power 1,000 vehicles. Tesla is building the 4680 round cells (46 millimetres in diameter, 80 millimetres high) into the Model Y, for example, which is being built at Giga Texas. The larger 4680 cells are also to be installed in the Tesla Semi electric truck, the Cybertruck pickup and the upcoming Roadster 2.