Magnis New York Anode Production
Australian listed company Magnis Energy Technology has secured a landmark deal to supply battery materials for the world’s leading electric vehicle manufacturer, Tesla.
The deal – subject to the company opening a new plant in the US – is for a three year contract to supply 17,500 tonnes per year of “Anode Active Materials” (AAM), starting in February 2025. Tesla has an option to double the contract to 35,000tpa.
The deal – thought to be worth around $A50 million a year – caused a 23 per cent surge in the Magnis share price to a peak of 49c a share, before it retraced some of its gains and settled around 44c, giving it a market value of around $420 million.
The Tesla deal is conditional on Magnis securing a location for a US based AAM facility by June 30 this year, producing product from a pilot plant by March 31 next year and starting production from February 1, 2025.
The AAM uses graphite sourced from Magnis’s Nachu graphite mine in Tanzania. Over the past 7 years the company has processed the Nachu graphite at its facility in New York. The company claims that its AAM product is produced at a 99.97% purity using existing commercial scale technology.
The new deal will produce the graphite concentrate in Tanzania where it will then be shipped to a US based AAM plant for the final coating process.
Anode Process Diagram. Source: Magnis Energy Technologies
Magnis chairman Frank Poullas says the company can produce a battery grade AAM that entirely avoids traditional chemical purification and energy intensive high thermal purification – leading to reduced costs and lower emissions.
Deal comes as Tesla poised to announce major scaling in production
The deal comes as Tesla is set to make a major announcement next week regarding how it plans to dramatically scale its production. Tesla’s “Investor Day“, which will be held on March 1, will include details on Tesla’s much anticipated 3rd generation platform which many speculate will enable the production of a $US25,000 ($A35,000) Tesla model.
Tesla CEO Elon Musk has also said that Tesla will announce it’s “Master Plan 3” at the event, 17 years after Musk’s famous original “Master Plan” in which he laid out the company’s overarching strategy of starting with high-cost/low-volume and moving to low-cost/high-volume.
Master Plan 3, the path to a fully sustainable energy future for Earth will be presented on March 1.
The future is bright! pic.twitter.com/11ug0LRlbD
— Elon Musk (@elonmusk) February 8, 2023
“The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model.” said Musk in the 2006 blog post.
Tesla’s track record as the fastest growing car manufacturer in history and its plans for the future are a huge opportunity for Magnis which could ride the EV wave for decades to come.
Biden Administration’s Inflation Reduction Act, a vortex sucking in clean technology
Much of Magnis’s graphite based AAM product will end up being turned into batteries at Tesla’s Nevada Gigafactory which recently announced a $3.6 billion expansion which will enable it to produce 100 GWh of batteries per year. Enough to make 1.5 million light electric vehicles annually.
The US government’s Inflation Reduction Act has supercharged the clean technology industry in the US and sparked what many are calling an “EV arms race” between the US, China and Europe. Massive incentives including a $35 per kilowatt-hour (kWh) battery cell manufacturing credit is incentivising companies to set up factories in the US.
Magnis says the US IRA will boost demand for its AAM products as electric vehicle manufacturers aim to qualify their vehicles for up to $7,500 rebate per vehicle for their customers.
“These are extremely significant incentives,” it said. “The need to source IRA-compliant material will be critical, positioning Magnis perfectly as an onshore supplier of AAM for use in electric vehicles.”
The Driven’s take: It’s becoming clear that the US Inflation Reduction Act is a giant vortex sucking in clean tech manufacturing skills and capital from around the world.
While it’s great to see Australian companies getting a strong foothold in what is set to become the biggest industrial revolution of all time, the Australian government must also capitalise on this moment and follow the strong incentive programs of the US and the EU.
Keyword: Australian battery company Magnis secures landmark deal to supply Tesla