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So said analyst Simon Moores in a report Monday. Also, a look at the possible Tesla-BMW partnership.
Graphite, lithium and cobalt market participants have been keeping an eye on Tesla Motors (NASDAQ:TSLA) since early this year, when the company announced plans to build a $5-billion lithium-ion battery gigafactory in the United States.
Since then, the maker of electric cars has moved fast. It announced a location for the gigafactory back in September and since then has been making quick progress at constructing it.
Case in point: analyst Simon Moores said Monday via his Benchmark Mineral Intelligence newsletter that construction of the gigafactory is “up to one year ahead of schedule as preparation for the site continued in Q4 2014 at an accelerated pace.”
He also states that Tesla plans to use the gigafactory to provide not only electric vehicle batteries, but also “stationary storage applications to store the intermittent energy generated from wind and solar sources.”
However, what’s perhaps most interesting for market participants is Moores’ comment that Tesla, which has already partnered with Panasonic (TSE:6752) on the gigafactory, is close to announcing other partners. Moores quotes Tesla as saying, “[a]dditional Gigafactory partners will be finalised shortly to create a fully integrated industrial complex.”
The prospect of more partners has excited market watchers, but as Moores notes, those partners may or may not be raw materials suppliers — in other words, companies that will provide the graphite, lithium and cobalt that the gigafactory will require. Indeed, in his opinion “agreements with mineral and metal companies [should not be expected] until well into 2015.”
That said, Moores is concerned that even given that time frame, Tesla may ultimately have trouble getting the materials it needs. “[W]hat Tesla is asking the world to do is to more than double the output of battery raw materials in a fraction of the time it would normally take to develop and at huge risk to suppliers,” he explains.
Definitely some food for thought as the gigafactory hurtles toward completion.
BMW alliance?
As if the above news wasn’t enough, Tesla was also making headlines Monday on rumors of a possible alliance with Germany’s BMW (ETR:BMW).
Reuters reported over the weekend that Tesla CEO Elon Musk told German publication Der Spiegel that his company is speaking with BMW “about whether we can collaborate in battery technology or charging stations.” He also described BMW’s production of carbon-fiber-reinforced car body parts as “interesting” and “relatively cost efficient.”
While no other details were provided — and BMW has not commented — the news outlet notes that back in June executives from the two companies met to discuss “the creation of charging stations usable for different types of electric cars.”
Finally, Musk told the publication that he sees Tesla establishing another battery production plant in Germany in five or six years. While there’s been no word yet about demand implications, it’s certainly possible that they could be dramatic given current speculation about how much graphite, lithium and cobalt the Nevada gigafactory will require.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
