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Tesla recently signed a very lucrative and long-term deal with China’s largest Lithium producer, Ganfeng. This deal supplies Tesla with at least one-fifth of all its Lithium needs and has a three-year extension over the initial two-year supply plan.

Tesla needs to support its 35-gigawatt hours of energy storage product goals and the only way that this Nevada-based fabricator can reach this target, is by securing a constant flow of 28,000 tons of lithium annually. This amount is expected to grow, as the need for more EV cars grows in the ever-hungry alternative energy car market.

With this deal, Ganfeng seals a series of very lucrative long-term contracts that include a deal to supply Lithium to South Korean LG Chem Ltd. Who are the battery suppliers for Fisker and Renault.

Ganfeng spokesperson stated to the media that “The agreement will help Ganfeng build a healthy long-term relationship with Tesla, which will help improve the company’s profitability, and benefit its long-term development.”

These contracts boosted prices initially, raising shares by 10%. However, due to the adjusted lower price of the Hong Kong IPO, which are around 29% lower than the current traded price. Ganfeng prices on the Shenzhen stock exchange have dropped by around 32% to meet the future IPO price.