What do you do if there's only one key mineral in the world that you need to make your product, and there's only one company in the world that controls most of it?
You cut a deal.
Tesla (TSLA) - Get Report will purchase cobalt, the key raw material used to make electric car batteries, from commodities giant Glencore as it looks to secure enough of the rare metal to both boost output and keep competition at bay.
Tesla will buy cobalt from Baar, Switzerland-based Glencore, the world’s biggest cobalt miner, as the carmaker looks to avoid a future supply squeeze, Bloomberg reported, citing a person familiar with the matter.
Discussions between Tesla and Glencore date back to January, when rumors initially surfaced that the two companies were looking to strike a deal ahead of Tesla's opening of its Shanghai gigafactory.
Tesla is looking to score 6,000 tons of the rare-earth mineral a year.
While there is currently enough cobalt supply to go around, Tesla’s expansion plans as well as an expected increase in demand from competitors also vying to roll out battery-powered vehicles has prompted Tesla to stockpile the rare metal now.
It's also a sign that Tesla is seeking independence from external battery suppliers. The carmaker has been buying cells made by Panasonic that are then put into modules and battery packs at its factories.