Tesla is ramping production at its newest gigafactories and, at the same time adding new vehicle models to its lineup. The success of its operations largely depends on the ability to produce the necessary battery cells in significant quantities. This means securing raw materials and components in an EV market where the competition is heating up.
Traditionally, China was the main supplier for these resources, but the U.S. government signaled it wants American companies to diversify the supply chain. The Inflation Reduction Act aims to incentivize exactly that while trying to convince companies to relocate production to North America. This is why many carmakers have recently announced battery factories in the region while signing contracts with North American or Korean suppliers for raw materials and battery components.
Tesla is following the same path, signaling its intention to enter the mining business by associating with another company or through a buyout. It also set up its first Lithium refining facility in Texas, showing that it wants to do whatever it takes to secure the precious materials it needs to scale up production. Tesla has estimated a production of at least 1.8 million electric vehicles in 2023, so there are a lot of battery cells that need to be produced to get there.
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