The Unexpected Challenge Ahead for Tesla’s Gigafactory

Benchmark Mineral Intelligence said in a report that the biggest challenge facing Tesla Motors Corp.’s (NASDAQ:TSLA) gigafactory will be “[t]ruly understanding the difference between commodities and specialist products.”

The report states:

Despite a Forbes article in early 2014, the question is not whether there is enough graphite, lithium or cobalt in the world to supply the huge volumes the Gigafactory will need, however. Today, as things stand there is not enough of battery grade lithium, graphite or cobalt to satisfy a Gigafactory running at capacity and existing global demand elsewhere.

The question should focus on today’s available tonnages of spherical graphite (and not just flake graphite), lithium hydroxide (and not just lithium carbonate) and chemical grade cobalt (rather than just metal concentrate) and what is coming down the new supply pipeline for 2020.

Understanding the fundamentals of where these products come from, how they are made and how they are sold will make or break any project, let alone one the size of the Gigafactory.

And with new suppliers struggling to gain financing today, there will not be enough suitable raw material come 2017 when Tesla plans to begin production.

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