Benzinga - Electric vehicle leader Tesla Inc (NASDAQ: TSLA) has dominated its subsector of the automotive market. The company’s focus on vertical integration and supply deals are two of the biggest items that may have separated the company from the rest of the pack. Here’s the latest.
What Happened: Shares of Tesla have risen over 80% year-to-date in 2023. Part of the momentum in shares could be coming from the company’s fourth-quarter earnings report and guidance for vehicle growth.
To keep up with production and delivery goals, Tesla has put an emphasis on vertical integration, controlling its supply chain and locking in long-term deals with partners.
On Monday, Tesla entered into an agreement with Magnis Energy Technologies (OTCQX: MNSEF), a vertically integrated lithium-ion battery technology and materials company.
The deal will see Magnis supply Tesla with a minimum of 17,500 tonnes per annum of anode active materials beginning in February 2025. The deal includes fixed prices on the materials.
Tesla also has an option to increase the annual supply agreement to 35,000 tonnes per annum.
The agreement between Magnis and Tesla is for a minimum of three years and is conditional on Magnis securing its final location for a commercial facility by June 2023 and producing anode active materials by February 2025.
Magnis is in the process of selecting a location in the United States for its anode active materials facility.
“We are really excited to bring our high performing AAM to market that requires no chemical or thermal purification throughout the whole process, which differentiates this sustainable material in the market and provides great value to all parties,” Magnis Chairman Frank Poullas said.
Related Link: Nickel And Mining It: General Motors Could Soon Own A Stake In This Tesla Metals Supplier
Why It’s Important: The deal signed with Magnis could complement existing deals Tesla has with BHP Group (NYSE: BHP), Piedmont Lithium (NASDAQ: PLL) and Syrah Technologies, among others.
Tesla is also rumored to be exploring an interest in acquiring Sigma Lithium Corp (NASDAQ: SGML).
Tesla CEO Elon Musk has hinted at the desire for the automotive company to eventually mine its own metals such as lithium. Tesla submitted a proposal for a lithium refining facility in November. That facility in Texas has job postings that could indicate plans for the future.
GM Competes For EV Resources: Benzinga recently reported that a mining company with a Tesla supply deal could see automotive rival General Motors Company (NYSE: GM) acquiring a stake.
Vale SA (NYSE: VALE) is working on splitting its metals business and iron ore operations. The metals unit, which is expected to be separated in 2023, has drawn interest from several companies, including GM.
Tesla has a supply deal in place with Vale for nickel. While the existing deal will remain in place, GM could be looking to get ahead of Tesla in securing future supply for electric vehicle components. GM also has a nickel supply deal with Vale in place.
GM also landed a deal with Lithium Americas Corp (NYSE: LAC) to give the automotive company exclusive access to a new lithium deposit at the Thacker Pass mine in Nevada.
The battle between Tesla and other automotive companies could get increasingly centered on supplying materials needed for electric vehicle components.
TSLA, MNSEF Price Action: Tesla shares are down 2.7% to $202.66 on Tuesday.
Magnis shares are up 17.86% to 33 cents on Tuesday.
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