Tesla and Syrah Resources appear to have avoided a major setback in their battery supply partnership, with the Australian graphite producer announcing that Tesla has officially withdrawn its notice of intent to terminate their graphite supply agreement.

The update comes after nearly a year of uncertainty surrounding the deal, which is considered a key part of Tesla’s efforts to build a North American battery materials supply chain independent of China.

According to a statement filed by Syrah on Monday, Tesla now accepts that the company has demonstrated it can produce graphite active anode material (AAM) samples that meet the automaker’s technical requirements. Syrah also said Tesla acknowledged the company has made “sufficient progress” toward final qualification of the material produced at its Vidalia, Louisiana facility.

The announcement ends months of negotiations and repeated deadline extensions between the two companies. Since July 2025, Tesla and Syrah had extended the resolution deadline four separate times after Tesla alleged that graphite samples produced at Vidalia failed to meet required specifications for use in EV batteries.

The original agreement, signed in 2021, calls for Syrah to supply Tesla with 8,000 metric tons of graphite anode material annually over a four-year period.

Graphite plays a critical role in lithium-ion batteries, serving as the primary material used in battery anodes. While much of the EV industry’s focus has centered on lithium and nickel, graphite remains one of the most strategically important battery materials due to China’s overwhelming dominance in refining and processing.

That is what made Syrah’s Vidalia facility so important to Tesla and the broader U.S. battery industry. Located in Louisiana, Vidalia is currently the only vertically integrated large-scale graphite anode material facility outside China. The plant processes natural graphite sourced from Syrah’s Balama mine in Mozambique into battery-grade material intended for use by automakers and battery manufacturers in North America.

However, producing battery-grade graphite at commercial scale has proven challenging. Automakers require strict consistency in purity, particle size, electrochemical performance, and long-term stability before approving materials for production vehicles.

Tesla first issued its default notice last summer after determining that samples from Vidalia did not satisfy those standards. While Syrah consistently disputed that it was technically in default, both companies continued working together behind the scenes to resolve the issue rather than immediately ending the partnership.

Even so, the agreement is not entirely free of risk yet. Syrah noted that Tesla still retains the right to terminate the contract if final qualification of Vidalia’s active anode material is ultimately not achieved.