As the aftershocks of unprecedented volatility in the nickel market continue to play out, one area of collateral damage that has been in focus has been the electric vehicle market.
Nickel prices, despite falling from highs, still remain at roughly double what they were just months ago and the metal is a key component for electric vehicle manufacturers, as it is used in EV batteries.
But it Looks as though the world’s most well-known EV manufacturer, Tesla, has been able to sidestep the volatility in the market through a “secret” deal it has made with mining company Vale.
Bloomberg reported this morning that a multiyear supply deal for nickel has been in place and covers nickel from Canada. “Unlike most of its peer automakers, Tesla has spent years focusing on how to secure its own nickel supplies,” the report says.
Gene Munster of Loup Ventures said: “What Tesla has done with nickel is a hidden competitive advantage. Tesla continues to be a couple of steps ahead of the rest.”
And Munster is right, in that Musk has “repeatedly” flagged nickel as a concern for the company amidst broader sector demand that is expected to more than triple by 2030.
On an earnings call two years ago, CEO Elon Musk urged: “Please mine more nickel. Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.”
Meanwhile, other EV manufacturers are left scrambling. “The nickel price surge and the implications from the Russia-Ukraine invasion are likely to push battery manufacturers, particularly in the U.S., to secure alternate supply chains,” Bloomberg wrote.
Tesla’s “secret deal” is one of many it has put in place over the last year, the report says.
Todd Malan of Talon Metals, who Tesla also buys from, said: “People don’t realize how far ahead Tesla is when it comes to securing the supply chain for raw materials and an integrated approach to battery materials.”
Vale, meanwhile, has said it plans on increasing its sales to the EV market between 30% and 40%, from 5%.