Tesla is avoiding nickel crisis with ‘secret deals’ with Vale and other suppliers, report says

A new report says that Tesla is avoiding the current nickel crisis through “secret deals” with suppliers, including Vale.

The price of nickel has more than doubled over the last 12 months.

Nickel is a critical resource when it comes to transitioning the world to electric transport and clean energy.

High-energy-density batteries, which are required for long-range electric vehicles, all use a significant amount of nickel in the cathode of the battery cell.

By volume and cost, it accounts for a significant part of an electric vehicle’s battery pack, which in turn is the most costly part of an EV.

Of course, nickel is also used for plenty of applications other than batteries for electric vehicles.

Actually, only about 5% of the world’s nickel supply is currently used for batteries going into electric vehicles, but that number is going up fast.

Even with conservative estimates of electric vehicle adoption, it is expected that EV nickel demand would jump from 5% to 59% of the overall nickel supply within this decade.

That means a giant squeeze in the nickel supply is going to happen if there’s not a major ramp-up of production soon.

In 2020, Tesla CEO Elon Musk urged nickel miners to increase production as he saw the problem coming, but things have escalated quicker than he could have imagined because of Russia’s invasion of Ukraine and the subsequent restrictions on trades with Russia, which is the world’s third-largest producer of nickel.

The conflict sent the price of nickel up to over $40,000 a ton before settling down to $33,000:

Now Bloomberg reports that Tesla was able to avoid some of the madness through “secret deals” including one with Vale:

That includes a multiyear supply deal with mining giant Vale SA. The agreement, which hasn’t been announced, covers nickel from Canada, according to people familiar with the matter who asked not to be named discussing private details.

The report didn’t state any specifics about the deal, and it’s not clear what is “secret” around it. Vale was already known to be Tesla’s main nickel supplier.

The company also has recently done a big deal to secure nickel supply from New Caledonia from a mine previously operated by Vale.

Tesla has been looking to secure more nickel from North American sources through deals with upcoming mines, like Talon Metals, which is looking to build a nickel mine in Minnesota.