Tesla Needs More Mining

Tesla introduced Cybertruck to the market in 2023 and has already received 2 million reservations. However, the challenge lies in Tesla's ability to meet this demand, given the scarcity of minerals. Experts suggest that Mexico, with its mineral reserves and existing relationships with Elon Musk, CEO, Tesla, is well positioned to step in and meet the growing demand for minerals.

Tesla's Cybertruck, shown to the public back in 2019, is the company's sixth vehicle. Initially priced at US$60,900, the cost has now increased by over 50%. While the stainless-steel electric truck has received both praise and criticism, it has accumulated a significant number of pre-orders, making it one of the most anticipated cars. However, there are concerns about Tesla's ability to meet demand for this vehicle. Tesla previously claimed an annual production capacity of 250,000 to 500,000 units. However, its Giga plant, located in Austin, United States, can only produce 125,000 units this year.  "There will be enormous challenges to reach production volume with the Cybertuck and to make it cash flow positive,” Musk said in a call with investors.

For Tesla to produce 125,000 Cybertrucks in 2024 the company would need to mine around 14,000t of graphite, 11,000t of nickel, 10,000t of lithium carbonate equivalent, 1,400t of cobalt, and 1,300t of manganese, according to Adamas Intelligence. Experts stressed that currently, Tesla requires the complete nickel output from Glencore's Murrin Murrin mine in Australia, along with more than 50% of its cobalt production. Additionally, Tesla aims to secure the exclusive rights to offtake 100% of Glencore's annual nickel production, projected to range between 80,000t and 90,000t in 2024. 

Over the years, Elon Musk has consistently urged mining companies and investors to increase the production of crucial minerals, emphasizing Tesla's interest in establishing contractual agreements with them, reported by Mining.com.

Experts explained that automakers have tried to secure production through exclusive agreements with mines. However, this is a risky move, as mining tends to be volatile, depending on the political and environmental position of the country. As a result, many automotive companies such as Tesla are considering increasing their investments in mining. 

Mexico has a very important advantage in the face of new demand for minerals by ranking in the Top 10 for the production of 16 minerals. In addition, Musk previously said that while he confirmed the main assembly of the Cybertruck will occur at Tesla's Gigafactory in Austin, Texas, he announced that a second production plant will be in Santa Catarina, Nuevo Leon. "The first production line will be here at the Texas factory, at this facility. [Nuevo Leon] will be the second location," Musk said. 

Despite this plan, Musk acknowledged delays in the construction of the Gigafactory in Nuevo Leon. The setback has extended the timeline for completing the facility beyond initial estimates, leading to questions about the project's viability. Musk clarified that the delay was due to groundwork being laid for the factory's construction. 

Experts believe Mexico can become a key ally for manufacturing cars as well supply the mineral needed.  Yet, experts in the industry have highlighted that potential opportunities may face hurdles due to state intervention and a lack of infrastructure. Another challenge lies in the economic impracticality of Mexico's lithium reserves, mainly situated in clay deposits, although new processes show promise for Mexico’s reserves.