Tesla Inc. is in talks with BHP Group on a nickel deal as the electric vehicle maker targets higher production and seeks to avoid a supply crunch, according to people familiar with the matter.
Talks are held up on pricing, and no final agreement has been reached so far between the automaker and BHP, the world’s largest miner, said one of the people, requesting anonymity because the talks are private. The discussions come as Tesla works to raise the amount of the metal used in vehicle batteries to improve performance, and as it makes a push into in-house cell production.
Nickel is a key component for the cathodes of EV batteries, and Tesla CEO Elon Musk has expressed concern about supply due to challenges in sustainable sourcing. A deal with Tesla may come as a surprise to some BHP investors since nickel makes up a small part of BHP’s business. It would signal real progress in the company’s efforts to expand in the space and retool the nickel division to serve battery makers.
A spokesperson for BHP declined to comment. Tesla didn’t respond to an emailed request for comment.
Demand for nickel is forecast to surge in coming years as Tesla expands and companies from BMW to Volkswagen Group add to their lineups of electric models. Musk in July promised a “giant” contract to miners that produce the metal in an “environmentally sensitive way.” Nickel can help pack more energy into batteries, and allows producers to reduce use of cobalt, which is more expensive and typically has a less transparent supply chain.