Also, to spell it out why Tesla
must get into mining: 90%+ of the required battery grade nickel sulphide extraction and refinery capacity simply does not exist today.
Tesla has two main choices:
- 1) Pay other companies to do this, who will use Tesla's multi-year purchase guarantees to gain financing from banks, expand their capacity on their own schedule and sell the output to Tesla. The disadvantages:
- Tesla will be exposed to the financing and schedule risks of others,
- There's 2-3 financing and investment middlemen who'll all want their cut,
- Tesla will have no control over the mining output, exposing themselves to the likes of the 2017 cobalt shenanigans: when the leading cobalt producer cornered the market and speculators (including prominent Tesla shorts...) drove up world cobalt prices,
- as Tesla learned it the hard way with Panasonic: synchronizing expansion of battery capacity creates friction and constant pricing risk. Panasonic actually toured competing car company representatives at the Gigafactory, in the summer of 2018, should Tesla fail ...
- Tesla's competitors will gain access to the developed output: Tesla will have paid for the expansion that then goes to competitors...
- even with long term purchase contracts Tesla will be exposed to the volatility of world nickel sulphide prices.
- 2) Or Tesla can develop the nickel sulphide output themselves. Higher upfront financing costs, but vastly lower downstream risks and perfectly synchronized growth. No CoGs volatility risks other than energy and labor costs.
Basically a "commodity" is only a true commodity for Tesla's growth purposes if it's available right now and in the foreseeable future with healthy competition keeping prices under control.
Nickel sulphide is
not such a commodity, and it's the primary long term driving factor of battery kWh costs.
