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Tesla signed a deal that could completely change how it powers its cars — here's how the move could affect prices

The deal will involve Magnis Energy, a graphite developer.

Tesla EVs,Tesla outsourcing

Photo Credit: iStock

As Tesla continues its reign as the United States' most popular electric vehicle maker, demand for brand-new EVs remains high and continues to grow — and Tesla is struggling to keep the supply coming.

The biggest factor preventing Tesla from churning out new cars as quickly as people want to buy them is the battery manufacturing process, which is difficult, expensive, and requires the mining of rare earth materials.

Until recently, Tesla was the only major automaker that made its batteries in-house without partnering with suppliers. However, that is changing as Tesla is now partnering with an Australian company to supply materials needed for lithium-ion batteries, starting in February 2025. 

The deal will involve Magnis Energy, a graphite developer, building a facility in the U.S. (location to be determined) and using it to supply Tesla with the materials needed to make its batteries.

The difficulty of the battery manufacturing process and the expense of mining for the necessary materials is one of the main factors that has made EVs, and Teslas in particular, so expensive — although costs have been getting lower, in large part due to increased competition.

Mining the materials needed for lithium-ion batteries, such as lithium, cobalt, and copper, comes with its own set of environmental problems. The mining process requires huge amounts of water and has major adverse effects on the surrounding ecosystems. However, according to one study from a University of Oxford researcher, those negatives are tiny in comparison to the harm that is caused by mining for coal, oil, and natural gas.

In addition, scientists are hard at work researching and developing alternatives to lithium-ion batteries that could make the EV industry even cleaner and more sustainable in the future. These include everything from solid-state batteries to sand batteries and wood-based carbon batteries to batteries made of shellfish shells.

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