Tesla Has Secret Nickel Supply Deal from Vale, Says Report

As Russia invades Ukraine, nickel prices have jumped significantly due to sanctions, resulting in price increases for Tesla’s electric vehicles (EVs) and others that use the mineral for their batteries.

Tesla’s many nickel contracts established over the past few years have allowed the company to withstand the market’s current supply shortages, according to a report from Bloomberg on Wednesday.

The automaker has managed to create ongoing partnerships with nickel suppliers from around the world, resulting in multi-year contracts that can outlast month-to-month supply conditions.

One such deal includes Tesla’s nickel contract with Vale SA, a Brazilian company currently mining in Canada that will help supply nickel to the automaker for the next several years.

In addition to its Canadian nickel supply, Tesla has major nickel contracts in Australia and New Caledonia.

Tesla has even signed a U.S.-based nickel supply deal with Talon Metal, which is expected to begin in 2026.

Tesla CEO Elon Musk has been focused on vertical integration since the company’s early days, which ultimately gives the automaker better control over the incoming supply chain.

“What Tesla has done with nickel is a hidden competitive advantage,” said Gene Munster, managing partner of Loup Ventures, to Bloomberg. “Tesla continues to be a couple of steps ahead of the rest of the EV auto industry.”

According to Morgan Stanley analyst Adam Jonas, he agrees Tesla is years ahead of rivals when it comes to supply chain issues. Jonas said in an investor note on Tuesday he believes Tesla may spend $200 to $250 billion on capital expenditures and R&D through 2030. He added the EV supply chain is “unsustainable on many levels,” referring to the price volatility of nickel at the moment.

This is part of the reason U.S. President Joe Biden sought Musk’s advice on supply chain issues amidst semiconductor shortages, after seeing how gracefully the company has weathered the shortages.