With the semiconductor shortage that has rocked the automotive industry in recent months, manufacturers have realized that good control over the manufacturing process of their models will become essential in the coming years.

Dependence on certain markets and certain companies has caused several problems in the auto industry in recent months, even among manufacturers not necessarily aware of the crisis, such as Tesla, which hopes to turn things around.

Thus, the Californian firm wants to take control of its entire production process, including the raw materials it will use for its car batteries. That’s why Tesla plans to acquire Sigma Lithium, a Brazilian company that, as the name suggests, works in the field of lithium mining. The operation, Bloomberg emphasizes, will be an investment of about three billion dollars.

Ground #lithium material produced in our dry crushing facility with 1200mm jaw crushers custom made for Sigma Lithium @MetsoOutotec in Brazil, significantly reducing penalty losses.$SGML $SGML.V pic.twitter.com/rc7W2Wy7Oa

— Sigma Lithium (@SigmaLithium) February 13, 2023

What would be the advantages of such a transaction for Tesla?

Sigma Lithium is one of the largest lithium operations in South America, thanks in particular to the Minas Genrias site, in operation since 2018, which, in addition to being one of the largest in the entire region, also has a strategic location. In fact, the proximity to the Atlantic makes it easier and faster to ship manufactured products around the world.

And that’s not all. Minas Genrias could significantly increase production. According to the latest estimates, today it may decrease from 270,000 tons per year to 766,000 tons by the end of the decade.

Additionally, large amounts of energy could be generated in the region through the use of hydroelectricity, a method that would allow the facility to develop at much lower costs than today.

The loop would be closed

Neither Tesla nor Sigma Lithium have made any statements regarding the possibility of a transaction, but the market has already reacted to what are currently only rumours. Indeed, Sigma shares rose by 25.4% after the first information released by the media.

If Tesla had indeed succeeded in acquiring Sigma Lithium, the American firm will close the battery production cycle, fully controlling the vertical supply chain. Indeed, in Texas, more precisely in Corpus Christi, Tesla already has a plant for processing crude lithium from Brazil.