Automakers around the world are scrambling for raw materials to expand the battery capacity of their electric vehicles.
It has its own EV battery supply chain plan. According to CEO Elon Musk, it’s entering a new part of the battery supply chain and that’s a license to print money.
A potential new business is lithium refining. The company is proposing a new facility in Texas to produce lithium hydroxide, a key component of high-performance lithium-ion batteries, according to a recently released permit application reported by Bloomberg.
The refinery is “the first of its kind in North America,” the filing says. Most lithium ores come from Australia and South America and are finally refined in China.
The price of refined lithium has gone from lows of under $6,000 per tonne to more than $71,000 per tonne over the past few years. Rising lithium prices increased the price of an average EV by about $2,000 during that period. The reason Tesla is considering moving is the lack of refining capacity and local refining capacity.
Tesla (NYSE: TSLA) did not respond to a request for comment on the project. Construction could begin in 2022 and production could start in 2024, according to the filing.
The project seems like a good decision given how Musk feels about sophistication. Lithium must be refined into battery-grade lithium carbonate and lithium hydroxide, which must be of very high purity. I would urge the house to get into the lithium refining business.You can’t lose.It’s a license to print money.”
Traditional automakers also want to make more EVs.both
(GM) wants to sell about 2 million EVs annually by 2025 or 2026. GM and Ford are investing billions in domestic battery capacity. GM has partnered
(003670.Korea) Plans to build a battery parts factory in the US The entire automotive industry is vertically integrated into battery supply.
Tesla appears to be the first to get into lithium refining. Probably not the last.
Investors seem intrigued. Tesla shares are up 1.3% in premarket trading on Friday. It’s a big uptick, but the whole market is up.
Dow Jones Industrial Average
Futures are up 0.9% and 0.8% respectively.
Please contact Al Root (email@example.com).