Sichuan Yahua Industrial Group Agrees to Five-Year Lithium Supply Deal with Tesla

Chinese company Sichuan Yahua Industrial Group announced on Tuesday it had signed a deal to supply battery-grade lithium hydroxide to the American electric vehicle manufacturer Tesla for the next five years.

Chinese company Sichuan Yahua Industrial Group announced on Tuesday it had signed a deal to supply battery-grade lithium hydroxide to the American electric vehicle manufacturer Tesla for the next five years.

According to a Shenzhen Stock Exchange filing, the Chinese giant said it put the total value of the contract, signed by its subsidiary Yaan Lithium, at $630-$880 million from the year 2021 to 2025. Yahua is currently based in the southwest region of the country’s Sichuan province.

Elon Musk’s company, which started delivering the first vehicles from its gigafactory in Shanghai in December 2019, already sources lithium – a key ingredient in electric vehicles’ batteries – from China’s Ganfeng Lithium, which is one of the biggest producers of the commodity in the world.

Analysts at Daiwa Capital Markets said that the Yahua agreement underscores Tesla’s “huge demand” for battery-grade lithium hydroxide, “particularly in view of the ramp-up of Model Y production” in Shanghai.

“We expect Ganfeng will continue to be the major if not largest lithium hydroxide supplier of Tesla on the back of this strong demand,” the analysts wrote in a note.


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