Tesla has reportedly agreed to purchase battery ingredients from South Korean company EcoPro Materials Co. to meet US requirements for federal tax credits for clean vehicles, according to the report.
EcoPro Materials, a precursor maker, said Monday it has signed a mid- to long-term supply contract with the U.S. automaker, The Korea Economic Daily reported. In its statement to South Korean financial regulators, the company did not provide details such as the name of the client or the size and value of the transaction.
“Details including supply quantities and values have yet to be specified,” said the unit of South Korea’s major electric vehicle battery materials producer, EcoPro Group. “We will supply (materials) based on the customer’s request and discussions.”
The publication’s sources reported that the more batteries the American electric vehicle manufacturer produces, the more precursors the company will supply to it. The two companies have been negotiating the deal since last year. Sources noted that the customer is most likely Tesla since the American company is the only electric vehicle manufacturer that enters into such supply deals.
“Tesla usually signs deals without minimum purchase volume guarantees as the company avoids any inventory issues by buying only what it needs according to demand,” one of the sources said.
Presumably, Tesla is looking for suppliers to comply with US regulations. According to the IRA, battery materials purchased from foreign businesses, including China, disqualify vehicles from receiving a tax credit of up to $7,500 per vehicle.
Precursors, the main material for cathodes, account for about 70% of the manufacturing costs of the positive end of a lithium-ion battery. Today, Chinese companies dominate the global precursor market.
EcoPro Materials has made more investments in new facilities by August 2025. They include a precursor production line to meet growing demand, the company said last week.
Tesla is expected to source more materials from South Korean suppliers as it ramps up production of 4,680 battery cells, industry sources said.
