Elon Musk Is Squaring Off Against China for the Future of Tesla

How important are metals to Tesla? Just check out the names of some conference rooms at its new $5 billion gigafactory in Nevada: Lithium, Nickel, Cobalt, Aluminum. They’re used to make lithium ion batteries, and Chief Executive Officer Elon Musk needs unprecedented quantities of the metals to reach an ambitious goal: producing 500,000 electric vehicles a year by 2018. That’s two years earlier than originally planned because of about 373,000 preorders for the Model 3 sedan, which the company will start delivering in late 2017.

And that’s no small task. When the factory was announced in 2014, Tesla said it would produce more lithium ion batteries annually by 2020 than were produced worldwide in 2013. The accelerated schedule to supply the Model 3, the automaker’s first mass-market car, doesn’t leave much time to create a complex supply chain that includes expanded mining and exploration operations. It also pits Tesla against consumer-electronics companies, which use the batteries in everything from mobile phones to laptops, and carmakers in China, where the government wants 5 million electric and other new-energy models on the road by 2020. “The world is going to need a lot more lithium ion batteries. Tesla knows that it’s going to have to source the raw materials themselves, and they are competing with China,” says Simon Moores, a managing director at Benchmark Mineral Intelligence. “They need to invest in new supply, and they are conducting a global search.”