Tesla reaches five-year lithium deal with Chinese supplier

China’s Sichuan Yahua Industrial Group Co. said on Tuesday it had signed a deal to supply battery-grade lithium hydroxide to Tesla Inc. for the next five years.

Yahua, which is based in southwest China’s Sichuan province, did not provide tonnage figures but, in a filing to the Shenzhen Stock Exchange, put the total value of the contract at $630 million to $880 million over 2021-25.

Tesla, which started delivering the first vehicles from its plant in Shanghai in December last year, already sources lithium — a key ingredient in EV batteries — from China’s Ganfeng Lithium, one of the world’s biggest producers of the commodity.

Tesla did not immediately respond to a request for comment on Tuesday.

In May, Yahua put a 20,000 tons per year lithium hydroxide plant into operation, more than doubling its previous capacity, even as prices languished at multi-year lows amid oversupply and a knock to lithium demand brought about by the coronavirus pandemic.

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