Tesla Risks High Lithium Costs Over Shifty Piedmont Deal

Estimated read time 2 min read

Is Tesla putting its consumers at risk?

Recently, electric cars in general have been under a lot of fire, especially when it comes to the acquisition of lithium and lithium-based products. As the front-runner in the charge toward electrification, Tesla has gotten the majority of the trouble. This was certainly the case for the brand in which their supplier has begun making amendments to their lithium dealings in hopes for a higher profit amid a fluctuating economy. It’s a scary time for Tesla but many are wondering what is actually going on and how the car maker got into this situation.

Learn why electric cars have a rust problem here.

Actually, there may not exactly be a world of hurt coming toward the tech giant, but they are setting themselves up for one heck of a nose bleed in the financial department. Basically, there is a new deal between Piedmont Lithium Supply Co. and Tesla stipulating the supplier will provide Tesla with 125,000 metric tons of extra lithium. All of this comes at a pretty hefty cost but it’s probably not what you might expect from a business that made its name on being one of the industry’s main competitors.

Essentially, the deal is completely dependent on a floating mechanism which may raise or lower the price of lithium based on the fluctuation of the economy. It’s an insane business strategy which practically incentivises one side to hope for the worst for the global economy while the other can only pray for the best. That means that if things go haywire for lithium prices, Tesla’s ability to produce cars may be jeopardized, or the price will simply be passed onto the consumer. With all of that in mind, it may turn out to be a foolish business deal but Tesla has a track record for defying risk so maybe it will work out as well as everyone hopes. 

Source: AutoNews

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