Tesla Inc (NASDAQ: TSLA) would offer a "giant contract" to any company that can efficiently mine nickel in an environmentally sustainable way, the automaker's Chief Executive Officer Elon Musk said during an earnings call Wednesday.
The automaker is encouraging nickel miners to work on extracting more of the silver-white lustrous metal due to its importance in the manufacturing of electric vehicle batteries, Reuters reported earlier.
The high price of batteries is said to be a hurdle for Tesla as it seeks expansion.
“Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way,” Musk said, urging miners to do more.
The EV maker's current sources for the metal are LG Chem Limited and Panasonic Corporation (OTC: PCRFY), both of which purchase nickel from mining companies.
“[Musk] needs nickel, so he hopes nickel prices will go lower and lower,” a Chinese nickel trader told Reuters. “Prices will not be impacted in the short-term because the market is in surplus.”
Nickel prices hit rock bottom, at a 14-month low of $10,865 a tonne, in March and are currently at $13,180, which is still a 30% decline from five-year highs in September 2019, Reuters noted.
The supply of battery-grade nickel is likely to run short by 2023. The balance of supply is expected to remain tight as demand for lithium-ion batteries spikes, Bloomberg reported.
Ambatovy, a large nickel project, representing 5% of class 1 nickel production capacity is not operational since March 2020. If the project doesn't resume, the nickel market will tighten further.
Tesla shares traded 4.75% higher at $1,668 in the pre-market session Thursday.
See more from Benzinga
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.