Tesla has signed a supply deal with China’s Ganfeng Lithium and its unit GFL International for battery-grade lithium products. 

The world’s top lithium company by market capitalization ($226.9 billion as of Nov. 1, 2021), Ganfeng Lithium has supplied battery-grade lithium to EV manufacturers in the past, including Tesla.

According to a filing with the Shenzhen Stock Exchange cited by Reuters, the new contract will allow the Jiangxi-based company and its subsidiary to provide products to Tesla for three years starting from 2022. The sales amount and contract value are still pending Tesla’s purchase orders, the document reveals.

We can expect this deal to be significant seeing as Tesla aims to launch several key projects in 2022. For example, the EV maker expects its newest factories in Berlin, Germany and Austin, Texas to start initial operations by the end of 2021.

Ganfeng Lithium headquarters

This likely means that both these new plants will see a ramp in their operations next year. Add to this the fact that the Cybertruck and the Semi could finally enter production in 2022 (albeit towards the end of the year in low volumes), and it should come as no surprise that Tesla is securing additional battery supply.

Both the Cybertruck and the Semi are expected to use the new 4680 battery with an enlarged, cylindrical cell that promises more range for less cost.

Ganfeng has been on a roll this year thanks to rising lithium prices and robust demand, with its third-quarter and nine-month net profits going up 507% and 648% year-over-year, respectively. In August, the company also announced an 8.4 billion yuan ($1.31 billion) investment in two battery production projects.

Ganfeng’s previous supply contract with Tesla signed in 2018 saw the Chinese company commit to provide the carmaker with a fifth of its lithium production.

Last week, word got out that Tesla also placed an order with Ganfeng’s rival CATL for 45 GWh worth of lithium iron phosphate (LFP) batteries, enough to build nearly 800,000 Model 3 Standard Range Plus and Model Y Standard Range units. 

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