If anything happened to Tesla’s second-quarter earnings (TSLA), it’s that Tesla CEO Elon Musk wants more nickel and talented people at the automaker.
Given that Tesla was able to maintain strong deliveries amid a global pandemic, talks about demand issues are starting to surface and analysts are starting to look at production constraints again.
As usual, Musk pointed to the supply of battery cells as the main production constraint for Tesla.
Musk unveiled an exciting new strategy from Tesla to help manage battery supply with LFP iron phosphate batteries.
We previously reported that Tesla is introducing a new version of the Model 3 in China with LFP batteries.
During Tesla’s earnings call for the second quarter of 2020, Musk explained that Tesla believes it improves efficiency enough to be able to use less energy-dense LFP batteries in some vehicles and still achieve a decent range.
This approach will release some high-energy nickel lithium-ion battery cells for Tesla’s other vehicle programs, which have so far only used lithium-ion cells with nickel as the primary material.
Musk argued that if there is going to be a raw material restriction, it will be nickel.
In the call, he pleaded with the mining companies to increase their nickel production:
Well, I would like to emphasize again, any mining company that exists, extracts more nickel. Okay. Wherever you are in the world, mine more nickel and don’t wait for nickel to get long again, a high point you experienced about five years ago, whatever. Seek efficiency, obviously high-volume, organic nickel mining. Tesla will award you a giant contract for a long period of time, if you mine nickel efficiently and environmentally friendly. Hopefully this message reaches all mining companies. Please get nickel.
The CEO is trying to convince nickel miners not to try to control supply to increase price, but to focus on more efficient, higher-volume production.
Along with the need for more nickel, Musk also emphasized the need for Tesla to secure more talent in manufacturing and engineering.
He mentioned the need for talent several times during the call.
Tesla Vice President of Engineering Drew Baglino also added:
In addition to what he said earlier about talent and people … the same goes for all areas of the cell, the supply chain, the manufacturing materials, the design. We are solving this problem. And we are treating it like any other problem we have solved. We will solve this problem and we want talented people to join us as we solve these problems.
It’s hard to overstate the amount of hiring Tesla will have to do in the years to come.
Among the increased production at its current facilities, Tesla will have to hire tens of thousands of people at its new Gigafactories in Germany and Texas.
Musk said he was particularly concerned about Gigafactory Berlin due to stricter restrictions regarding non-competition clauses.
The taking of Electrek
The ability to attract top talent is one of Tesla’s best competitive advantages.
Ben Schaffer, president of Unplugged Performance, had a very interesting perspective on this.
He said that despite Tesla having a high turnover rate, the talent cycle at Tesla is helping the automaker get new ideas and absorb the experience.
There are many talented engineers in the world, and most of them want to work at Tesla and for Elon, whom Shaffer describes as the best engineer in the world.
Schaffer said to me:
It is a magnetic effect and the magnet is Elon, the world’s brightest engineer. That and Tesla’s mission, which is to solve the world’s biggest problem.
He believes in Tesla’s ability to continue to attract top talent, and even if they don’t stick around for long, Tesla and even Elon himself are absorbing much of their knowledge and using it long after they’re gone.
It does not mean that people are disposable either, but it is an interesting perspective to consider it as a cycle.
As for nickel, it appears Tesla is looking for miners willing to sign long-term contracts.
I wouldn’t be surprised if Tesla ends up partnering with some junior miners who would be more willing to lock themselves up into long-term contracts to secure financing for new mining projects.
What you think? Let us know in the comment section below.
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