Tesla is looking to secure additional supplies of lithium from a key source country, and is in early talks with the biggest lithium producer in Chile to invest in supply of one of the crucial components for EV batteries, a senior Chilean official has told the Financial Times.
Tesla could invest in the construction of a processing plant in Chile—one of the top-producing lithium countries in the world—the executive vice-president of Chilean development agency Corfo, Eduardo Bitran, told FT.
Tesla is looking to ramp up production of its first mass-model EV, the Model 3, which is way behind initial construction and delivery schedules.
If the EV carmaker does manage to strike a deal in Chile, it would be Tesla’s first such deal for securing its key material for batteries. Lithium prices have been going up as demand for batteries continues to grow, and almost every legacy automaker has announced plans to roll out electric vehicles in the coming years.
“With an increasing supply of lithium, Chile is key for any company that wants to become global in electro-mobility,” Corfo’s Bitran told FT.
“Being close to Chile or having a strategic alliance in Chile becomes a strategic factor for a company like Tesla,” he noted.
Tesla may invest in technology to produce lithium hydroxide on site in Chile’s brine, and it could also partner with a company to manufacture battery cathodes in the South American country that boasts some of the world’s cheapest solar power, Bitran told FT.
This is not the first time that reports have surfaced about Tesla’s consideration of possible lithium ventures in Chile. In December 2015, a local financial newspaper reported that Tesla had discussed a potential agreement with Chilean state copper miner Codelco.
Other carmakers are also seeking to ensure lithium supply as demand grows along with the rise of EV popularity.
Earlier this month, Toyota’s trading arm, Toyota Tsusho Corporation, said that it was buying 15 percent in Australia-listed lithium producer Orocobre, whose main asset is in the Olaroz lithium brine project in Argentina.