Tesla (TSLA) - Get Tesla Inc. Report is negotiating with metals production giant Glencore (GLNCY) to ship cobalt to Tesla's new electric-vehicle factory in Shanghai in an effort to avoid a supply squeeze on the key battery metal.
Citing people familiar with the matter, Bloomberg News reported on Wednesday that a deal with Baar, Switzerland-based Glencore will help Tesla, the battery and electric vehicle maker, shore up its cobalt supply as it ramps up output at its recently completed Shanghai Gigafactory.
It also will help Glencore, the world’s largest cobalt miner, which is in a strong position to benefit from the boom in electric-vehicle sales and corresponding batteries required to power them yet suffered from losses last year following a supply-induced collapse in cobalt prices in 2018.
Nearly three-quarters of the world’s cobalt comes from the Democratic Republic of Congo, and as much of 20% of the country’s output is produced at informal makeshift mines where fatalities and human-rights abuses are commonplace, according to Bloomberg.
The opening of Tesla's Shanghai plant, marked by a dancing and jacket-tossing Elon Musk, has helped propel the electric vehicle maker's shares to record highs.
Indeed, analysts have been in ludicrous mode over Tesla on expectations that the company is in pole position to continue boosting sales of electric vehicles, particularly in Asia.
Tesla received yet another analyst nod on Tuesday, this time from Jefferies, which lifted its one-year price target on the electric vehicle company's stock price by 50% to $600 amid what it sees as a very favorable 2020 earnings outlook.
Shares of Tesla were down 1,28% at $531.06 in morning trading on Wednesday.