With the surge in demand for electric vehicles causing the need for more ‘Gigafactories’ to be built, demand is high for lithium ion batteries’ key ingredient: cobalt.
Cobalt is an earth metal that makes up about 35 percent of the lithium ion battery mix — the battery used in EVs and smartphones. The battery business makes up 42 percent of the global cobalt demand, and companies such as Tesla, Apple and Google are scrambling to secure as much of the precious metal as possible. Like most things, this is easier said than done.
Cobalt supply is already in a severe deficit and that’s without considering the exponential increase of nearly 500 percent in demand that is to come in the near future with the rise in popularity of EVs. Analysts at Macquarie Research predict that the global deficit for cobalt supply will reach 885 tons this year increasing year-over-year to about 5,340 tons in 2020. That’s a big problem.
Source: Materialscientist via Wikimedia Commons
Why not just get more cobalt?
The answer is not that simple.
Nearly 60 percent of the planet’s global cobalt supply comes from the tumultuous Democratic Republic of Congo where mining procedures aren’t exactly the portrait of safety. It’s reported that over 40,000 child workers employ the vast cobalt mines of the Congo and the UN estimates that 80 children die per year working in the mines. Among other hazards such as unsupervised and unprotected mining, excessive exposure can cause “cobalt lung” — a form of pneumonia that can lead to long-term respiratory illness and death.
With the extremely hazardous conditions of mines in the Congo going vastly unreported until recently, it is fair to expect that CEOs of tech companies will have to start answering some hard-hitting questions about the ethical sourcing of their cobalt supply.
So what does this all mean?
Well it means several different things depending on who you are.
If you’re an industry giant who consumes mass quantities of cobalt for production, you’re prob
U.S. Cobalt has key assets in Idaho, Utah and Alberta (Source: U.S. Cobalt)
ably looking for alternatives to the Congo. A more homegrown solution to this problem may be U.S. Cobalt. Tesla’s new Gigafactory in Reno, NV, will soon become the largest producer of lithium ion batteries in the world — for that they will need a lot of cobalt, something that may be difficult considering the global competition for this precious metal. Ethically sourced American cobalt could be the answer that Tesla needs.
If you’re an investor at a hedge fund, the cobalt deficit could mean big bucks for you. Several firms have begun buying up large physical amounts of cobalt in a hoarding maneuver. The plan is that they will hold the cobalt supply until demand increases more. The metal is now sold at around $19 per pound — a 50 percent increase since September 2017. Investors will likely sit on the supply until it’s increased to around $25 per pound. Several of these purchasers are the China State Reserve who bought 5,000 tons, and Pala Investments, Ltd. Pala has recently started a $150 million fund to buy more of the Earth’s cobalt supply.
“We have been focused on the evolution of the battery chemistries and this has allowed us to invest early in different components of the battery,” Stephen Gill, managing partner at Zug, Switzerland-based Pala Investments, told Bloomberg. “We hope to continue to be ahead of the curve as technologies evolve.”
For now they certainly are ahead of the curve, but this could potentially be a lucrative position for even the most modest investor. Right now on the Toronto Stock Exchange, U.S. Cobalt (TSX: USCO.V) is trading at around just 42 cents. Investors could quickly snatch up large amounts of stock at a low price, in hopes that the cobalt demand shifts from the Congo to America.
Renowned mathematician Banesh Hoffman said it best, “with every new discovery in science brings with it a host of new problems.” That certainly rings true in the search for an alternative to gas-burning vehicles, where we found a solution, only to discover the dire conditions involved in sourcing it.
Energy
Tesla Energy celebrates one decade of sustainability
Tesla Energy has gone far since its early days, and it is now becoming a progressively bigger part of the company.
Tesla Energy recently celebrated its 10th anniversary with a dedicated video showcasing several of its milestones over the past decade.
Tesla Energy has gone far since its early days, and it is now becoming a progressively bigger part of the company.
Tesla Energy Early Days
When Elon Musk launched Tesla Energy in 2015, he noted that the business is a fundamental transformation of how the world works. To start, Tesla Energy offered the Powerwall, a 7 kWh/10 kWh home battery system, and the Powerpack, a grid-capable 100 kWh battery block that is designed for scalability. A few days after the products’ launch, Musk noted that Tesla had received 38,000 reservations for the Powerwall and 2,500 reservations for the Powerpack.
Tesla Energy’s beginnings would herald its quiet growth, with the company later announcing products like the Solar Roof tile, which is yet to be ramped, and the successor to the Powerwall, the 13.5 kWh Powerwall 2. In recent years, Tesla Energy also launched its Powerwall 3 home battery and the massive Megapack, a 3.9 MWh monster of a battery unit that has become the backbone for energy storage systems across the globe.
Key Milestones
As noted by Tesla Energy in its recent video, it has now established facilities that allow the company to manufacture 20,000 units of the Megapack every year, which should help grow the 23 GWh worth of Megapacks that have already been deployed globally.
The Powerwall remains a desirable home battery as well, with more than 850,000 units installed worldwide. These translate to 12 GWh of residential entry storage delivered to date. Just like the Megapack, Tesla is also ramping its production of the Powerwall, allowing the division to grow even more.
Tesla Energy’s Role
While Tesla Energy does not catch as much headlines as the company’s electric vehicle businesses, its contributions to the company’s bottom line have been growing. In the first quarter of 2025 alone, Tesla Energy deployed 10.4 GWh of energy storage products. Powerwall deployments also crossed 1 GWh in one quarter for the first time. As per Tesla in its Q1 2025 Update Letter, the gross margin for the Energy division has improved sequentially as well.
Tesla Energy shined in what was a weak delivery report for the first quarter, as the company’s frequently-forgotten battery storage products performed extraordinarily well.
Tesla reported its Q1 production, delivery, and deployment figures for the first quarter of the year, and while many were less-than-excited about the automotive side, the Energy division performed well with 10.4 GWh of energy storage products deployed during the first quarter.
This was a 156 percent increase year-over-year and the company’s second-best quarter in terms of energy deployments to date. Only Q4 2024 was better, as 11 GWh was recorded.
Tesla Energy is frequently forgotten and not talked about enough. The company has continued to deploy massive energy storage projects across the globe, and as it recorded 31.5 GWh of deployments last year, 2025 is already looking as if it will be a record-setting year if it continues at this pace.
Tesla Megapacks to back one of Europe’s largest energy storage sites
Although Energy performed well, many investors are privy to that of the automotive division’s performance, which is where some concern lies. Tesla had a weak quarter for deliveries, missing Wall Street estimates by a considerable margin.
There are two very likely reasons as to why this happened: the first is Tesla’s switchover to the new Model Y at its production facilities across the globe. Tesla said it lost “several weeks” of production due to the updating of manufacturing lines as it rolled out a new version of its all-electric crossover.
Secondly, Tesla could be facing some pressure from pushback against the brand, which is what many analysts will say. Despite the publicity of attacks on Tesla drivers and their vehicles, as well as the company’s showrooms, it would be safe to assume that we will have a better picture painted of what the issue is in Q2 after the company reports numbers in July.
If Tesla is still struggling with lackluster delivery figures in Q2 after the Model Y is ramped and deliveries are more predictable and consistent, we could see where the argument for brand damage is legitimate. However, we are more prone to believe the Model Y, which accounts for most of Tesla’s sales, and its production ramp is likely the cause for what happened in Q1.
In what was a relatively bleak quarter, Tesla Energy still shines as the bright spot for the quarter.
Tesla has chosen the location of its latest manufacturing project, a facility that will churn out the Megapack, a large-scale energy storage system for solar energy projects. It has chosen Waller County, Texas, as the location of the new plant, according to a Commissioners Court meeting that occurred on Wednesday, March 5.
Around midday, members of the Waller County Commissioners Court approved a tax abatement agreement that will bring Tesla to its area, along with an estimated 1,500 jobs. The plant will be located at the Empire West Industrial Park in the Brookshire part of town.
Brookshire also plans to consider a tax abatement for Tesla at its meeting next Thursday.
The project will see a one million square-foot building make way for Tesla to build Megapack battery storage units, according to Covering Katy News, which first reported on the company’s intention to build a plant for its energy product.
CEO Elon Musk confirmed on the company’s Q4 2024 Earnings Call in late January that it had officially started building its third Megapack plant, but did not disclose any location:
“So, we have our second factory, which is in Shanghai, that’s starting operation, and we’re building a third factory. So, we’re trying to ramp output of the stationary battery storage as quickly as possible.”
Tesla plans third Megafactory after breaking energy records in 2024
The Megapack has been a high-demand item as more energy storage projects have started developing. Across the globe, regions are looking for ways to avert the loss of power in the event of a natural disaster or simple power outage.
This is where Megapack comes in, as it stores energy and keeps the lights on when the main grid is unable to provide electricity.
Vince Yokom of the Waller County Economic Development Partnership, commented on Tesla’s planned Megapack facility:
“I want to thank Tesla for investing in Waller County and Brookshire. This will be a state-of-the-art manufacturing facility for their Megapack product. It is a powerful battery unit that provides energy storage and support to help stabilize the grid and prevent outages.”
Tesla has had a lease on the building where it will manufacture the Megapacks since October 2021. However, it was occupied by a third-party logistics company that handled the company’s car parts.
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