Tesla Inc. (TSLA.O) broke ground astronomically on a Texas lithium refinery, Monday. According to CEO Elon Musk, the facility would generate enough battery metal by 2025 to construct around 1 million electric cars (EVs).
In order for Tesla to fulfil its lofty EV sales targets, Musk claimed the automaker must move outside its core business of manufacturing cars and into the complicated field of lithium refining or processing.
The availability of battery quality lithium is a critical bottleneck in the development of electric vehicles, as said by Musk, who spoke on Monday during the phenomenal ceremony as dozers and similar earth-moving machinery worked in the background.
Musk stated that Tesla intended to complete the factory’s construction the following year and then achieve full production roughly a year later.
As a result, Tesla will be the first significant carmaker in North America to process its own lithium. The whole processing of many important minerals, including lithium, is currently dominated by China.
Texas aspires to be able to provide for everyone on its own, independent of any unfriendly foreign countries. Greg Abbott, the governor of Texas, stated at the ceremony that people need lithium.
Although he stated that the automaker would want to continue to purchase the metal from its suppliers, which includes Albemarle Corp (ALB.N) alongside Livent Corp (LTHM.N), Musk hadn’t specify the amount of lithium that the factory would process annually.
Musk believed there is a need to employ lithium suppliers in the future because Tesla won’t be able to handle everything.
Construction of the Albemarle’s South Carolina-based lithium processing facility, which will refine about 100,000 tonnes of the metal annually, is expected to start next year and be completed sometime later this decade.
Despite having supply agreements with companies like Piedmont Lithium Inc (PLL.O) and others, Musk hadn’t specify where Tesla will obtain the spodumene concentrate, a crude form of lithium that will be refined at the facility.
Tesla announced that it will forego the traditional lithium industry refining method, which depends on sulfuric acid and other potent chemicals, in favour of substances that were less harmful to the environment, including soda ash.
People wouldn’t experience any negative effects if they lived right next to the refinery. Musk said that the operations were quite clean, despite local media reports claiming that some environmentalists had expressed concerns about the plant.
The declaration made on Monday was apparently Tesla’s first attempt to enter the lithium production market. In 2020, Musk informed the company’s investors that Tesla had acquired the legal rights to 10,000 acres in Nevada, where it planned to manufacture lithium from clay deposits—a feat that had never been accomplished on a large scale previously.
Tesla hasn’t yet used the procedure, despite Musk’s boasts that the business has created a unique method for producing lithium from the Nevada clay resources responsibly.
Musk has exhorted businesspeople to go into the lithium refining industry, comparing it to the process of creating money.
The recent drop in the price of lithium and similar commodities, according to Tesla, will help the company’s ailing margins in the second part of the year.
Tesla moved its corporate headquarters from California – Texas in 2021, and the refinery is the company’s most recent foray into the state. The Boring Company alongside SpaceX, two of Musk’s other businesses, are also active in Texas.
Musk and Tesla happen to be Texas’ economic titans, and Abbott said it is a moment to be pleased because he is a Texan.
