Tesla Inc. has signed new long-term deals with two of its existing Chinese battery-materials suppliers, the latest move by automakers to secure supplies amid intensifying competition.
Zhejiang Huayou Cobalt Co. and CNGR Advanced Material Co. signed pricing agreements with the electric-vehicle giant for supplies until the middle of this decade, according to separate stock-exchange statements from the companies. The deals are for ternary precursor materials -- chemical cocktails that are key to storing energy in lithium-ion batteries.
The announcements come as major automakers look to scoop up battery metals in the face of a looming shortage. General Motors Co. unveiled deals to buy inputs ranging from lithium to cathode materials last week, shortly after Ford Motor Co. revealed a list of suppliers with raw materials including Argentinean lithium and Indonesian nickel.
Huayou Cobalt will supply the materials to Tesla from July 1, 2022 to the end of 2025. The miner said the prices of the products will be subject to market prices for nickel, cobalt and manganese, as well as refining fees. CNGR will supply the EV automaker between 2023 and 2025.
Shares of Huayou Cobalt and CNGR jumped more than 9% each on Monday morning.
The transition to cleaner energy is boosting demand for battery ingredients, while supply has been hampered by Covid-related logistical woes and a lack of investment. That’s pushing up the prices of the raw materials and is denting profitability for some carmakers.
Both Huayou and CNGR were among a list of direct suppliers named by Tesla in its 2021 annual impact report. CNGR said in its statement that it supplied Tesla from 2020 until this year.