Tesla (NASDAQ:TSLA)
The acquisition of Sigma Lithium (SGML) by Tesla (NASDAQ:TSLA) might put the electric vehicle manufacturer on the cusp of a powerful lithium play. The possible repercussions of a transaction are now being investigated by analysts. Despite it, Tesla’s stock declined in the market.
According to Bank of America, if Tesla were to acquire Sigma Lithium, the company would have control over enough annual lithium output to manufacture between 1.25 million and 1.50 million electric cars. Given the discount to valuation and the possible increase in resource size that might be achieved via more drilling, the company said that it believes Sigma’s shares still have considerable value.
According to Wells Fargo, a merger between Tesla and Sigma would assist the electric vehicle industry leader in guaranteeing the necessary lithium supply and help capture margin in the future. On the other hand, expert Colin Langan warned that additional operational risks would be added to the mix and that the site of the lithium mine will likely not qualify for the Inflation Reduction Act.
Langan and his colleagues calculated how much electric vehicle (EV) manufacturing an agreement with Signa might sustain.
“In Phase 1, Sigma aims to produce 36.7 ktpa LCE of lithium carbonate equivalent. In Phases 2 and 3, the company plans to produce 67.4 ktpa LCE. According to reports, GM’s investment in LAC successfully secured 40 ktpa of LCE, sufficient for 1 million cars. This indicates that Sigma Phase 1 could support around 0.9 million cars. At the same time, Phases 2 and 3 could provide capacity for approximately 1.7 million vehicles, provided that the mine produces at the anticipated levels. In comparison, TSLA’s 2022 delivery objective is more than 1.8 million.”
In Tuesday’s early trading, Sigma Lithium stock increased by 12.88%, while Tesla stock decreased by 1.85%. After a request by the United States National Highway Traffic Safety Administration to the electric vehicle manufacturer Tesla for further information on a tragic accident in the San Francisco Bay area involving a Tesla model and a fire truck, other news regarding Tesla emerged.
Featured Image: Pexels @ SCREEN POST
