Tesla Falls Amid Reports of EV-Maker Secretly Tying Up Nickel Supplies

Tesla (NASDAQ:TSLA) stock traded 1% lower in premarket Wednesday, giving up its previous session’s gains amid reports of the company tying up supplies of nickel in secret deals.

The stock had added $84 billion in valuations Monday on the company’s plans for a second stock split in less than two years.

Tesla is focused on nickel-based chemistries for longer-range vehicles. It uses iron phosphate for shorter-range vehicles.

According to a Bloomberg report, among the many such deals the world’s most valuable automaker signed, is a multiyear supply pact with mining giant Vale. The agreement, which hasn’t been announced, covers nickel from Canada, the report said.

The efforts are part of CEO Elon Musk’s focus on vertical integration to maintain control over the supply chain, important for controlling costs and ensuring timely deliveries.

Musk has repeatedly flagged nickel supply as the company’s biggest concern and the metal’s availability is a source of anxiety throughout the EV sector. Battery-sector demand for nickel is expected to more than triple to about 1.5 million tons in 2030 from 400,745 tons this year, according to BloombergNEF.

Sanctions against Russia over its invasion of Ukraine have added to worries about secure supplies, since the country holds about 17% of global capacity for refined Class 1 nickel, the type required for EVs.

The London Metal Exchange had to intervene on March 8 to calm the nickel market after prices spiked as much as 250% in two sessions to go beyond $100,000 a ton. That spike was due to a short squeeze and the gains have mostly pared since, but the market remains anxious about where prices are headed.

In January, Tesla committed to buy 75,000 metric tons of nickel concentrate from a Talon Metals (TSX:TLO) project being developed in Minnesota. That followed agreements with BHP (NYSE:BHP).