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Stellantis Secures Sustainable Lithium Supply for BEVs

Story Highlights

Stellantis is playing its part in environmental sustainability by producing battery electric vehicles. Entering right partnerships for supply of critical input material is key to progress.

The Netherlands-based Stellantis NV (NYSE: STLA) has secured a deal to obtain sustainable lithium hydroxide, which is used in manufacturing electric vehicles (EV) in North America.

Amid rising inflation and supply chain constraints, EV makers are struggling to find the right supplier for their EV projects. Lithium, nickel, and cobalt are the three major metals needed for manufacturing the batteries used in EVs.

These metals are trading at record highs due to inflation, making them all the more difficult to source. Several EV manufacturers have also increased the prices of vehicles due to the rising cost of these input raw materials.

The Deal

Controlled Thermal Resources Ltd. (CTR) has agreed to supply the battery-grade lithium hydroxide from its Hell’s Kitchen Project in California. The deal is signed for ten years, under which CTR will supply up to 25,000 metric tons of lithium hydroxide to Stellantis annually. Stellantis has also announced a similar supply deal for its European EV production in late 2021.

CTR produces lithium through geothermal brines, utilizing renewable energy and steam to produce battery-grade lithium products in an integrated, closed-loop process. This eliminates the processes of evaporation of brine ponds, open pit mines, and fossil-fueled processing, all of which add heavily to the carbon impact.

In such an environment, Stellantis’s deal to source lithium supply from CTR for a ten-year period will ensure that the car makers’ supply issues are taken care of. This partnership will aid Stellantis’s plans to have global annual battery EV sales of five million vehicles by 2030.

Commenting on the deal, Stellantis CEO, Carlos Tavares, said, “In the fight against global warming, bolstering our battery electric vehicle supply chain to support our bold electrification ambitions is absolutely critical… Ensuring we have a robust, competitive, and low-carbon lithium supply from various partners around the world will enable us to meet our aggressive electric vehicle production plans in a responsible manner.”

CTR CEO, Rod Colwell, said, “Securing clean lithium produced with energy from a renewable resource helps to further decarbonize the battery supply chain which in turn, delivers cleaner cars with less environmental impact. We look forward to a strong and successful relationship with Stellantis.”

Price Target

Based on ten Buys and three Holds, STLA stock commands a Strong Buy consensus rating. The average Stellantis price forecast of $24.21 implies 57.8% upside potential to current levels. STLA stock has lost 15.2% since the beginning of the year.

Stock Investors

TipRanks’ Stock Investors tool shows that investor sentiment is currently Positive on Stellantis, with 1.3% of portfolios tracked by TipRanks increasing their exposure to STLA stock over the past 30 days.

Conclusion

The EV race has amped up the plans and projects of all car manufacturers, each vying to secure the top spot. Stellantis’ foray into the race is comparatively new but the company is making headlines with all the right moves.

Read full Disclosure

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