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Tesla Motors Inc’s (TSLA) Growth Setback May Lead To A Boom In Lithium Ion Market


In order to be the pushing force of innovation for both the solar power and electric vehicle power industry, Tesla Motors Inc (NASDAQ:TSLA) has been striving to meet visionary goals.

In order to meet these goals, the total amount of Lithium Ion Batteries that Tesla is required to produce for yearly production in 2018 is allegedly equal to that of global production in 2013. This may seem to be an absurd goal to accomplish due to the scale of the task. However, it is important to remember that Tesla owns a Gigafactory.

The goals that Tesla has put into its time schedule for 2018 include the prospective demand for 500,000 vehicles per year. Furthermore, the company has had to expand the efficiency of production due to the market potential that they had located for its Model 3 sedan. The Model 3 sedan already has a total of 375,000 pre-orders, and this is the before market demand alone.

Tesla needs to ensure that they are prepared for the high demand factor at market peak, when the model is first released to the public to buy.

Although it is more than possible for Tesla to manufacture the amount of Lithium Ion Batteries that it needs due to the enormous size of its factory, the main problem is gaining enough material to be sufficient for this surplus of Lithium Ion Batteries.

If Tesla wishes to triumph in its plans to be the leading production pioneer of electric cars by the year 2018, nickel, cobalt, aluminum, and namely, lithium are going to be crucial.

Recommended article: What Prominent Executives Have to Say About Tesla Motors

Allegedly, despite the fact that this may sound as a simple need to purchase a list of commodities in vast amounts, this is not the case. Lithium is an extremely high demand product and as such the element tends to be rather high in price.

Deutsche Bank predicts that Lithium supply will remain a close call this year with a deficit of 13,000 tons from 2015.

Four separate mining organizations were responsible for approximately 83% of the global lithium supply as of last year.

These four organizations extend to FMC Corp, Sichuan Tianqi, Albemarle Corp, as well as Quimica & Minera de Chile SA.

However, since Tesla’s announcement of plans for future development of Lithium Ion Batteries, numerous outside parties have started racing towards feeding the ambitious Lithium appetite of the pioneer of electric vehicle production and development.

It is expected that pricing of Lithium will peak prior to the release of Tesla’s first mass-market vehicle, the Model 3.

This is due to the diminished supply of lithium. Shortage of this element is expected by 2021, although this is not the main element in Tesla batteries.

Worthy of note, Lithium is not the only element that is required to manufacture Tesla Batteries. Lithium only accounts for 2% of a Tesla battery. According to Goldman Sachs, per Model S Battery pack, 139 Pounds of Lithium is required.


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