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Tesla’s battery supply is getting a bump from a new five-year partnership with China’s Sichuan Yahua Industrial Group Co.
Sichuan Yahua, a wholly-owned subsidiary Yaan Lithium, announced the deal Tuesday. Reuters reported a Shenzhen Stock Exchange filing that showed the company put the total value of the contract at $630-$880 million over 2021-25.
Tesla started production at Giga Shanghai about a year ago. The company is ramping up production of the Model 3 and Model Y at Giga Shanghai, eventually scaling to 500,000. As Tesla’s production numbers rise, so does the need for lithium, an important ingredient in Tesla’s battery design.
Tesla is reportedly looking for suppliers around the world and will likely start facing more competition for lithium supply, as more automakers begin to electrify their fleets.
Sichuan Yahua is a partner in the midst of growth. The company doubled its lithium hydroxide plant’s capacity to 20,000 tons per year in 2020.