Tesla's potential lithium deal is sized up by analysts
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Tesla (NASDAQ:TSLA) may be on the verge of a strong lithium play through an acquisition of Sigma Lithium (SGML). Analysts are busy evaluating the potential implications of a deal.
Bank of America said acquiring Sigma Lithium would give Tesla (TSLA) control over enough annual lithium production to produce ~1.25M to 1.50M electric vehicles. The firm said it still sees significant value in Sigmaâs shares given the discount to valuation and upside potential to the resource size through further drilling activity.
Wells Fargo thinks a Tesla-Sigma would secure needed lithium supply and help capture margin in the future for the EV giant. However, analyst Colin Langan warned the location of the lithium mine probably will not qualify for the Inflation Reduction Act and there would be new operational risks in the mix .
Langan and team ran their own numbers on how much EV production a Signa deal could support.
"Sigma is targeting 36.7 ktpa LCE of lithium production in Phase 1 and 67.4 ktpa LCE in Phases 2 & 3. GM's LAC investment secured 40 ktpa LCE which reportedly supports 1M vehicles. This implies Sigma Phase 1 could support ~0.9M vehicles and Phase 2 & 3 could add capacity for ~1.7M vehicles, if the mine produces at targeted levels. This compares to TSLA's 2022 delivery target of >1.8M."


Shares of Sigma Lithium (SGML) rose 12.88% in early trading on Tuesday, while Tesla (TSLA) shed 1.85%. There was some other news in the mix with Tesla after the US National Highway Traffic Safety Administration asked the EV maker for more information about a fatal crash involving a fire truck and Tesla model in the San Francisco Bay area.
Read a breakdown on Tesla from Seeking Alpha contributor Envision Research that factors in much of the latest news.