Piedmont Lithium

Piedmont Lithium Stock Price Soars after Tesla deal

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Monday September 28, Australian mining company Piedmont Lithium announced the signing of a five-year-supply-deal with Tesla. 

The Terms and Conditions of the Lithium Deal 

The deal stipulates that Piedmont will be supplying about 33% of its planned 160,000-tonnes-per-year-spodumene concentrate output to Tesla. 

Spodumene is a mineral from which lithium can be produced. They are set to be extracted from mines in North Carolina owned by Piedmont.  

Both parties also have an option to extend the length of the contract by another five years.

According to the Piedmont Lithium’s press release, there is another important clause tied to the deal. The deal is conditional upon both companies “agreeing to a start date for […] deliveries between July 2022 and July 2023.”

President and CEO of Piedmont Lithium Keith Phillips expressed his excitement about the Tesla deal. “We are excited to be working with Tesla, Phillips said. “[Tesla] represents the start of the first US domestic lithium supply chain and a disruption to the current value chain.” Phillips also added that Piedmont will be accelerating its mining development in order to support Tesla’s plans. 

The Lithium Deal Caused 83% Increase in Stock Price

The stock market was not oblivious to the announcement by Piedmont Lithium. Following the announcement, the company’s shares rose by 83%. Shares were trading as high as $50.99 during the day

Tesla shares also experienced a 4.5% gain during early trading hours on Monday morning

The Lithium deal: Our Thoughts

This deal comes on the heels of Tesla’s Battery Day, and makes perfect sense for Tesla.  

Lithium is widely used in the production of high-energy density, rechargeable lithium-ion batteries that power EVs.

The ultimate objective of Tesla is to increase the volume of production. In turn, this will decrease the costs associated with producing electric vehicles.

The automaking company is ramping up its effort to increase its supply of battery cells. Tesla is producing cells in-house, and is also relying on global suppliers to do so. 

Last month, Tesla announced a deal worth $100 million with Panasonic to increase battery production at Tesla’s Gigafactory 1 plant.

During Battery Day, Tesla unveiled the 4680 battery cell that will provide a competitive advantage to the company. The battery will increase a vehicle’s energy density by five times, range by 16%, and power output by six times. 

All in all, battery production costs are bound to decrease, and this will trigger a domino effect. EV production costs will lower as well, which will enable them to achieve cost-parity with ICE-powered vehicles. 

And it is through Tesla’s huge efforts that the democratization of EVs is concretely starting to take shape.


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