Ganfeng Lithium Industry won Tesla's long single again! Lithium hydroxide rush to buy hot again

On November 1st, Ganfeng Lithium Industry announced that the company and its wholly-owned subsidiary Ganfeng International signed a product supply contract with Tesla, agreeing that from January 1, 2022 to December 31, 2024, the company and Ganfeng International will supply battery-grade lithium hydroxide products to Tesla. The actual purchase quantity and sales amount shall be subject to the purchase order issued by Tesla.

According to the third quarterly report of Ganfeng Lithium Industry, the company's Q3 achieved revenue of 3 billion yuan, a year-on-year increase of nearly 100%, an increase of 21.7% over the previous year, and a net profit of 1.1 billion yuan, an increase of more than five times over the same period last year and an increase of 12.2% over the previous year.

The company's newly built annual production capacity of 50,000 tons of lithium hydroxide project has been successfully released. According to the data of its research report on October 27th, Ganfeng Lithium already has an annual production capacity of 43000 tons of lithium carbonate and 81000 tons of lithium hydroxide.

This is not the first time Ganfeng Lithium Industry has supplied lithium hydroxide to Tesla. In September 2018, the former announced that the company and its wholly-owned subsidiary Ganfeng International and Tesla agreed on a strategic cooperation agreement from January 1, 2018 to December 31, 2020 (which can be extended for three years). Tesla designated his battery supplier to purchase battery-grade lithium hydroxide products from the company and Ganfeng International, with an annual purchase quantity of about 20% of the company's total production capacity for that year, subject to the final settlement.

However, it is worth noting that compared with Tesla's agreement to "designate its battery supplier" to purchase from the company in 2018, Tesla now seems to have kicked out the battery manufacturer, and the partnership with Ganfeng Lithium Industry is more "direct".

On December 29th last year, Tesla again "issued an order" and signed a battery-grade lithium hydroxide procurement contract with Ya'an Lithium, a wholly-owned subsidiary of Yahua Group. In 2021-2025, Tesla will purchase battery-grade lithium hydroxide products worth a total of US $6.3-880 million from Ya'an Lithium Industry.

Locking the production capacity of Ya Hua Group for 5 years, and then working with Ganfeng Lithium Industry, Tesla frequently "bypassed battery suppliers" and directly purchased lithium hydroxide. What is the intention?

Industry insiders pointed out that in addition to cost reduction considerations, car companies bypass battery factories to purchase lithium hydroxide, the most important thing is home-made batteries. The data show that 1GW lithium iron carbonate batteries can consume 549 tons of lithium carbonate or 356 tons of lithium hydroxide, while 1GW ternary power batteries will consume 679-710 tons of lithium carbonate or 441tons of lithium hydroxide.

This is indeed in line with Tesla's blueprint for development. Tesla has made bold remarks a few days ago that car delivery is expected to grow by an average of 50 per cent a year in the next few years, and the first batch of cars equipped with 4680 batteries-the 4680 batteries are Tesla's self-developed batteries-will be delivered early next year. Musk has said that the goal of mass production of Tesla batteries is to reach 100 GWh/ years in 2022 and increase to 3 TWh/ years in 2030.

Analysts believe that if calculated at 3 TWh per year, the demand for lithium hydroxide for 4680 batteries will be as high as 13 million tons per year in 2030. Cinda Securities predicts that the actual global demand for lithium hydroxide for power batteries will reach 580000 tons (corresponding to 510000 tons of lithium carbonate equivalent LCE) in 2025.