Telsa amended its supply agreement with Piedmont Lithium on Tuesday. The new deal secures the electric vehicle maker's lithium deliveries for the next three years. PLL stock declined Tuesday after initially spiking premarket following the news. And Tesla stock fell following its Q4 delivery report on Monday.
North Carolina-based Piedmont will supply Tesla with 125,000 metric tons of spodumene concentrate, or SC6, from its North American Lithium mining operation in Quebec. Deliveries will start in the second half of 2023 and continue through 2025, the company says. The three-year deal includes an option to renew for another three years.
According to the terms, SC6 pricing will be set by a formula based on average market prices for lithium hydroxide monohydrate at the time of each shipment to Tesla during the agreement.
North American Lithium, previously known as the Quebec lithium mine, is an open pit mining and SP6 operation owned 25% by Piedmont and 75% by Australia-based Sayona Mining. Sayona Mining will source the SC6, and Piedmont agreed to purchase 113,000 metric tons per year, or 50% of the total production. Piedmont expects the first commercial shipments to Tesla to begin in Q3 of 2023.
"The electric vehicle and critical battery materials landscape has changed significantly since 2020 and this agreement reflects the importance of — and growing demand for — a North American lithium supply chain," Piedmont Lithium CEO Keith Phillips said in the release.
Tesla, Piedmont's Previous Deal
Piedmont initially entered a sales agreement with Tesla in September 2020. That five-year deal guaranteed 160,000 metric tons of SC6 annually from Piedmont's North Carolina deposit and was expected to generate 10% to 20% of the company's total revenues.
PLL stock started to reclaim its gains afterhours Tuesday after sliding 2.7% during the trading day. Shares leapt nearly 8% premarket, before paring gains as the market dropped to start the year. Piedmont Lithium shares are down roughly 22% over the last three months, and more than 50% off their March, 2021 peak.
Meanwhile, TSLA stock tumbled 12.2% on Tuesday following its Q4 delivery report on Monday. The EV giant set a record for deliveries in the fourth quarter but still missed lowered analyst forecasts.
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