China’s Grip On Tesla’s Battery Supply Chain Highlighted In New Report
Tesla leans heavily on China for its energy storage needs, a new report indicated. Nearly 40 percent of the 61 companies Tesla sources its lithium-ion battery materials from are Chinese, the analysis found.
Japanese publication Nikkei released the report yesterday, with inputs from Tokyo-based AI technology company Fronteo. The latter harnessed machine-learning algorithms to dissect Tesla’s intricate supply chain web. The two entities identified over 13,000 companies believed to be Tesla suppliers.
Chile has 36 percent of global lithium reserves, while Chile and Australia combine for 80 percent of global EV battery material extraction. But reliance on China seems inevitable as 60 percent of global lithium refining takes place on Chinese soil. Tesla did not immediately respond to our request for comment.
China’s dominance further extends to specialized domains, like nonferrous metal smelting – 40 percent of the 42 companies engaged in the process are Chinese. The country also holds the top share for “inorganic chemistry” companies – 33 percent of the 102 companies specializing in inorganic chemistry are Chinese, as per the study.
The Japanese publication further analyzed Tesla’s reliance on China by rating its Chinese suppliers on a scale of ten, using the “chokepoint score” index methodology. Tesla supplier and lithium products manufacturer Ganfeng earned a chokepoint score of 6.8, while inorganic compounds producer Novoray scored 7.1. Zhejiang Huayou Cobalt scored 5.7.
As US-China trade relations simmer, reliance on imported materials could pose a risk for brands like Tesla. On August 1, China imposed export controls on germanium and gallium, materials used in semiconductors. China’s move came in response to US export restrictions on advanced chips.
To mitigate the implications of the US-China trade war, Tesla has multiple battery manufacturing expansion plans in the pipeline: Panasonic will increase its battery production at Gigafactory Nevada by 10 percent, while efforts appear underway to build more packs at the Fremont factory.
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