If one thing transpired out of Tesla’s (TSLA) Q2 earnings, it’s that Tesla CEO Elon Musk wants more nickel and talented people at the automaker.
Considering that Tesla was able to maintain strong deliveries amid a global pandemic, talks of demand issues are starting to surface, and analysts are starting to look at production constraints again.
As usual, Musk pointed to battery cell supply as the main production constraint for Tesla.
Musk brought up an interesting new strategy from Tesla to help manage battery supply with LFP iron phosphate batteries.
We previously reported that Tesla is introducing a new version of the Model 3 in China with LFP batteries.
During Tesla’s Q2 2020 earnings call, Musk explained that Tesla believes its improves efficiency enough that it is able to use less energy-dense LFP batteries in some vehicles and still achieve a decent range.
This approach is going to free up some energy-dense nickel-based Li-ion battery cells for Tesla’s other vehicle programs, which has so far only used Li-ion cells with nickel as the primary material.
Musk argued that if there’s going to be a raw material constraint, it’s going to be nickel.
On the call, he pleaded with mining companies to increase their nickel production:
Well, I’d just like to re-emphasize, any mining companies out there, please mine more nickel. Okay. Wherever you are in the world, please mine more nickel and don’t wait for nickel to go back to some long — some high point that you experienced some five years ago, whatever. Go for efficiency, obviously environmentally friendly nickel mining at high volume. Tesla will give you a giant contract for a long period of time, if you mine nickel efficiently and in an environmentally sensitive way. So hopefully this message goes out to all mining companies. Please get nickel.
The CEO is trying to convince nickel miners to not try to control supply in order to increase the price, but to instead focus on more efficient higher volume production.
Along with the need for more nickel, Musk also emphasized the need for Tesla to secure more talent in manufacturing and engineering.
He brought up the need for talent several times during the call.
Tesla SVP of engineering Drew Baglino also added:
Adding to what you said earlier about talent and people… the same goes in all areas of cell, supply chain, manufacturing materials, design. We are solving this problem. And we’re treating it like any other problem that we have solved. We will solve this problem, and we want talented people to join us as we solve these problems.
The amount of hiring Tesla is going to have to do in the next few years is hard to overstate.
Between growing production at its current facilities, Tesla is going to have to hire tens of thousands of people at its new Gigafactories in Germany and Texas.
Musk said that he was particularly concerned about Gigafactory Berlin due to stricter restrictions regarding non-compete clauses.
The capacity of attracting top talent is one of Tesla’s best competitive advantages.
Ben Schaffer, president of Unplugged Performance, had a very interesting perspective on it.
He said that despite Tesla having a high turnover rate, the cycle of talent at Tesla is helping the automaker get new ideas and absorb expertise.
There are a lot of talented engineers in the world, and most of them want to work at Tesla and for Elon, who Shaffer describes as the best engineer in the world.
Schaffer told me:
It’s a magnetic effect and the magnet is Elon, the world’s most brilliant engineer. That, and Tesla’s mission, which is solving the world’s biggest problem.
He believes in Tesla’s ability to keep attracting top talent, and even if they don’t stay for long, Tesla and even Elon himself are absorbing a lot of their knowledge and using it long after they’re gone.
It’s also not to say that the people are disposable, but it’s an interesting perspective to look at it as a cycle.
As for nickel, it sounds like Tesla is looking for miners willing to sign long-term contracts.
I wouldn’t be surprised if Tesla ends up partnering with some junior miners who would be more willing to lock themselves into long-term contracts in order to secure financing on new mining projects.
What do you think? Let us know in the comment section below.
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