- Tesla (NASDAQ:TSLA) might buy a battery-metal mining company
- The potential acquisition would streamline electric vehicle (EV) battery production
- This competitive edge could be a long-term growth driver for TSLA stock
Tesla (NASDAQ:TSLA) may be taking a significant step forward in EV production. Earlier this week, Elon Musk stated that company is considering purchasing a company in the metal mining space. While there is no deal in progress yet, Musk noted that it is “not out of the question.” TSLA stock is down this morning, but the possibility of such an important acquisition could be the driver it needs to pull back into the green.
What’s Happening With TSLA Stock
TSLA stock is down this morning, but it is working hard to rally. As of this writing, it is down 3%. Like other high-growth tech stocks, TSLA has been battling negative market forces since last week’s Federal Reserve rate hike spurred a market selloff. While Tesla and its peers have rallied multiple times since then, bearish energy is still strong.
The EV leader needs a catalyst. And it may just get one. On Tuesday, Musk spoke at the Financial Times Future of the Car 2022 conference and addressed the future both of Tesla and the EV sector. “We will address whatever limitations are on accelerating the world’s transition to sustainable energy,” he stated. “It’s not that we wish to buy mining companies, but if that’s the only way to accelerate the transition, then we will do that.”
Musk emphasized the global need to transition to sustainable energy. The purchase of a mining company would do much to accelerate Tesla’s growth and scale production. Between the supply chain crisis that has plagued EV producers to the rising prices of metals spurred by Russia’s invasion of Ukraine, battery production has faced many constraints. Tesla has managed to maintain its place at the top of the EV race, but competitors such as Ford (NYSE:F) and Toyota (NYSE:TM) are making progress on the battery front.
What It Means
Late in April, Tesla announced an exciting development regarding lithium iron phosphate (LFP) batteries. While this cost-effective innovation could absolutely drive TSLA stock forward, it doesn’t eliminate the need for metals. It is more important than ever that Tesla is able to secure the materials it needs. For this reason, a mining acquisition is a logical step forward.
Musk did not name any specific companies, but his eye is likely on the lithium space. As Electrek reports, “with lithium prices 400% higher since that original announcement, Tesla seems to be making more moves in the space.”
Acquiring a lithium miner would make sense, given Tesla’s doubling down on LEP battery production. It would also be the driver that TSLA stock needs as the company looks to overcome external forces. It seems probable that Musk will move to acquire a mining company in the future. The only question is how soon. In the meantime, investors should be watching carefully.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
