Tesla & Ganfeng Lithium Contract Shows Tesla’s Path Forward Into 2022 & Beyond
A few days ago, Tesla and China’s Ganfeng Lithium Co, in particular its subsidiary GFL International Co Ltd, have signed a contract to supply battery-grade lithium products to Tesla, Reuters reports. Ganfeng is the world’s top lithium company by market cap and has supplied lithium to Tesla before. The new contract will allow Ganfeng and its subsidiary to provide products to Tesla for the next three years beginning in 2022. According to a filing with the Shenzhen Stock Exchange, the sales amount and value of the contract are still pending Tesla’s purchase orders.
Teslarati noted that although the sales amount and value of the contract are still pending, the deal will be pretty substantial given Tesla’s plans to launch a number of important EV projects next year. Both of its newest factories, Giga Berlin and Giga Texas, are slated to start operations by the end of 2021 and then ramp up operations next year.
Tesla will likely see more record-shattering numbers and growth in 2022, as its big new gigafactories will be online and meeting the demands of its customers, which are demanding a lot more cleantech products.
In his podcast Tesla Daily, Rob Mauer discussed Tesla’s path forward with Pierre Ferragu of New Street Research. Rob asked Pierre what he was seeing for Tesla in regards to the supply chain as we move into 2022. Pierre shared that based on info from a company supplying Tesla with silicon carbide MOSFETs needed for the inverter, numbers look bullish, and based on a conversation with Elon Musk, he’s got high hopes. “My view was actually Tesla is shaping up to be able to do a million cars this year.” Though, some things have slowed down the progress.
He noted that Tesla exited the third quarter with a million-car run rate and even if the number at the end of the year is 13–14% below a million, he thinks that Tesla is doing very well. He said that the opening of Giga Berlin will most likely be three months too late for Tesla to reach a million cars in 2021.
Pierre also added that he thinks that the production ramp for the S and X have been hampered by supply constraints, so with these two challenges in mind, this is why he thinks Tesla will be close to a million EVs but will miss it by a thousand or a little over a thousand units.
“For the next year, we are still on track to see a first car produced in Austin and a first car produced in Berlin before the end of the year. So we’re scared it’s going to be early next year and it’s not going to be like in June. So next year is going to be a year of ramping two more production sites. Knowing that Tesla has basically two relatively mature production sites, next year is going to be a year where Tesla is on the journey to double production capacity.”
He added that it’s not like Tesla is breaking ground on new factories and then having to wait another year. He pointed out that we will see the Tesla’s production increase week by week.
“It’s going to happen in a very challenging environment, but that’s basically my answer to your question. If you give them the credit to be able to ramp production over a year or a bit more than a year, they should be at a two million run rate at some point relatively early in the year after next.”
Pierre added that by the time this has happened, Tesla will most likely have broken ground somewhere else.
“It’s always easier to grow the next 50% as long as you have insane, large demand — but really largely exceeding your production capacity, which I think is still the case for a very, very long period of time.”
Rob agreed with Pierre and said that he didn’t really care too much about how next year comes in from the final number perspective but that what is more important is the capacity that Tesla is bringing online and it’s clear that it will be 2 million or more.
As Tesla continues to focus on its production capacity, it will need the batteries and materials to support strong growth. So, it makes sense that Tesla would sign a big three-year contract with Ganfeng. And it’s safe to assume that Tesla and Ganfeng will probably extend that contract in a year or two.
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