Tesla and Yahua Agree to Three-Year Supply Deal for Lithium Carbonate

China’s Yahua Industrial Group has secured a new order from Tesla to supply lithium carbonate, a crucial raw material for electric vehicle batteries. Under the purchase agreement dated June 19, Yahua, through its subsidiary Yahua Lithium Ya’an, will supply an unspecified amount of lithium carbonate to Tesla from 2025 to 2027, with an option to extend the contract for another year. The price will be determined according to a method agreed upon by both parties.

Currently, Yahua has an existing contract to supply Tesla with 63,000 to 88,000 tonnes of lithium hydroxide from 2021 to 2025, valued at $880 million. This contract was extended in August last year for an additional 7.5 years, increasing the supply to 207,000 to 301,000 tonnes. By the end of 2023, Yahua had already supplied 5.8 billion yuan ($799 million) worth of lithium products to Tesla, according to the group’s annual trading report.

Based in Sichuan, Yahua primarily manufactures and sells industrial explosives but is also heavily involved in the EV battery sector. It is one of the first companies in China to produce lithium hydroxide and has partnerships with Contemporary Amperex Technology Ltd. (the world’s largest battery maker), as well as South Korea’s LG and SK On. Yahua also invests in multiple lithium mining projects worldwide, including the Kamativi mine in Zimbabwe, which has started production and is expected to reach full capacity this year. Additionally, Yahua has offtake agreements with lithium miners like Vancouver-based Sigma and Australia’s Pilbara Minerals.

The signing of this agreement further acknowledges the quality of Yahua's lithium products and its sustainable development capabilities in the lithium industry. It enhances the stability of Yahua's growth in the lithium sector and strengthens its long-term cooperation with Tesla. The commencement of the lithium carbonate production line will aid in the full release and smooth sales of the products. The execution of this agreement will not significantly affect the independence of Yahua’s business operations, nor will it create significant reliance on Tesla.

Tesla, Inc. is a US-based electric vehicle and energy company, founded in 2003 and located at 1 Tesla Road, Austin, TX 78725. It is engaged in the design, development, manufacturing, and sales of high-performance electric vehicles, electric power systems, energy storage systems, charging facilities, and solar power installations. Tesla has no related-party relationships with Yahua’s actual controllers, directors, supervisors, senior management, or subsidiaries in terms of ownership, business, assets, debts, or personnel.