The price of Lithium continues to fall and this is great for Tesla or any EV company.
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Price of Lithium Falling
The price of Lithium Carbonate continues to fall and has gone from about $87,260 per ton to now $27,268 per ton and this is about a 69% drop in price. This is good for Tesla or any company that is making EVs or batteries for EVs.
The big question about this is: How low can the price of Lithium go? There are those who think that the price can get below $15,000 per ton, and this is a stark contrast to the $87,260 per ton that it used to be.
There is one reason that Tesla has been able to lower prices, and that is because the price of Lithium is falling rapidly.
There is not one single company that provides Lithium for Tesla. By the end of 2021, Tesla had inked a new deal with Ganfeng Lithium, in China, for example.
It's important to know that the technical-grade Lithium carbonate is usually involved in the production of LFP batteries, while the battery-grade Lithium carbonate is usually involved in cobalt-rich nickel-cobalt-manganese Lithium-ion batteries. Phew, that was a mouthful of technicality - but the point is, Lithium is used in both battery chemistries - it's just that there is more iron in the LFP batteries.
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Why This is Great For Tesla
This is great for Tesla because it allows Tesla to lower the prices of its vehicles. It's as simple as that. Tesla saves on cost of materials and can pass this cost on to customers.
Tesla isn't trying to make as much as it possibly can on the cost of the vehicle itself. All roads truly lead to FSD for Tesla and if you have listened to Elon Musk in the past, he has said that an autonomous vehicle greatly increases in value. It's likely we'll see FSD continue to go up in price as it gets better and better.
That's the true value here, is that Tesla can sell more cars at a lower price and use its Trojan Horse - FSD - to one day flip a switch and have an autonomous fleet of vehicles. I expect this to happen in the next few years.
Tesla also benefits because it will lessen the cost of their stationary Energy storage as well. This is a product that is in high demand and Tesla will be able to make more profit on its Megapack and PowerWall products, which are mostly batteries and some additional hardware setup with software running them.
Is falling Lithium prices good for Tesla and other EV companies?
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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.
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