The Chinese Sichuan Yahua Industrial Group has signed a contract with Tesla to supply battery-grade lithium hydroxide for the next five years. According to a report from the Shenzhen Stock Exchange, the contract is worth between 513 and 716 million euros.
Based on this price range, the total procurement volume is expected to be between 63,000 and 88,000 tons, or 12,600 to 17,600 tons per year, according to experts quoted by Reuters news agency.
Yahua commissioned a new lithium hydroxide plant in Yaan (Sichuan province) in May 2020. This doubled the company’s capacity to around 40,000 tons per year. Tesla already purchases lithium in China from the company Ganfeng.
The additional Yahua deal underscored Tesla’s ‘huge demand” for battery-grade lithium hydroxide, “especially given the ramp-up of Model Y production in Shanghai.” Ganfeng, however, would likely remain Tesla’s largest lithium supplier.