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Tesla Motors Signs Contract With Pure Energy Minerals

|Includes: Tesla, Inc. (TSLA)

Tesla Motors signed a lithium-sourcing agreement with Pure Energy Minerals to procure lithium from Nevada site.

Tesla Motors is about to source essential component from California. Tesla news affirmed that it could acquire lithium from a region nearer to its home after it signed a supply contract with a lithium supplier. The Canada-based Pure Energy Minerals proclaimed that it concluded a contract with Mr. Musk's enterprise to supply it with lithium hydroxide, which it could utilize in its batteries.

The lithium would be purchased from Pure Energy's Nevada Lithium Brine Project at Clayton Valley, just 210 minutes away from Tesla's "Gigafactory 1" site situated in east of Reno-Sparks. It is also located in the same region as Albemarle's Silver Peak lithium brine mine. Silver peak is the only lithium production facility in the US.

Tesla news today revealed that an official at Pure Energy, Robert Mintak, stated that the deal with the electric vehicle pioneer is a significant landmark for Pure Energy's lithium brine project and its enterprise development model. The contract depends upon the successful development of lithium site by Pure Energy.

The lithium producer stated that it would be researching to determine whether the site is technologically practical and financially feasible. If the organization succeeds in meeting the requirements of its contract regarding the implementation of the venture, lithium hydroxide quality and component supply, then this agreement with the automaker would successfully cover a time span of 5 years.

Tesla Motors news informed that Pure Energy would also be delivering the component at a fee lower than that of the market, a key cohesive point for the automaker, as it intends to cut down costs for its batteries. Cutting down the total manufacturing charges of its batteries is also a significant factor in its decision to establish the 10,000,000 square foot Gigafactory, which would probably prove to be the largest footmark in the earth for manufacturing.

The Pure Energy agreement would only cover a part of Tesla's lithium needs, which would include various sources. The company recently signed a 5-year agreement to purchase lithium from the Mexico-based Sonora Lithium Project, another site that is being developed as well.

Tesla CEO, Elon Musk, posted a tweet that the agreement with the Mexican deal is not exclusive and has many possibilities. He also stated that his company continues to explore lithium deposits in Nevada as well.

It is probable that the supply agreement would not only ensure that Tesla's batteries are manufactured at a reasonable cost but also improve its image in the competitive market. CEO should utilize the procured component in an adequate manner to meet the expectations of its fans.

Tesla has emphasized on lithium since it is the core component of its batteries. Hence, it is striving to procure much lithium in order to continue its production.