In the United States, Tesla wants to open its own lithium refinery. An activity described by Elon Musk as “authorization to print money” thanks to the financial fortune it can bring.
In recent months, the cost of lithium has skyrocketed: it increased by 480% between January 2021 and January 2022 according to BMI. And when we know that a lithium battery in an electric car sometimes represents 40% of the car’s total price (as in the case of the Tesla Model Y), we better understand the reasons that drive car manufacturers to try to find solutions for buy lithium at a good price. In this little game, Tesla could take a step ahead of its competitors.
A lithium refinery for Tesla from 2024?
Indeed, as reported Reuters, Tesla wants to create a lithium refining plant in Texas and has submitted a formal request to the authorities. He says the company wants to turn raw lithium into a material that can be used to make batteries. The goal is to produce the lithium hydroxide needed to produce the battery cells for electric cars, and in particular Tesla’s 4,680 cells.
If this request is successful, Tesla will be able to start the construction site from the fourth quarter of 2022 to start commercial production from the end of 2024 as stated in the document.
Note, however, that this plant would not be a mine at all and therefore would not be used to mine lithium. Tesla should therefore continue to obtain raw lithium to transform it to obtain the purity necessary for the production of batteries.
What to print money according to Elon Musk
However, refineries are very important in the field of electric cars. In fact, Elon Musk recalled a few months ago that a refinery was more or less equivalent to an authorization to create money. The American billionaire made it clear during a conference call with investors the margins were very high in this sectorsimilar to what happens in the software industry.
Remember that Tesla would also like to enter the lithium mining business. The American company announced in 2020 that it had purchased a 10,000-hectare mine in Nevada. With the ambition to use much “cleaner” methods to extract lithium from the subsoil. But for the moment the project seems to have stopped.
Towards a fall in the price of electric cars
All these projects are very important for Tesla, but also for its competitors. It is in fact mainly by managing to lower the cost of batteries that it will be possible to offer more affordable electric cars. If Elon Musk has promised that the price of Tesla’s electric cars will fall as inflation falls, other methods will help achieve this.
This is particularly the case with the 4680 cells of the new Tesla batteries, which should reduce the production costs of the Model Y, making it possible to mass-produce the Tesla Semi truck and the Cybertruck electric pickup.
Internalization of lithium mining and refining are also avenues considered by car manufacturers. We can mention in particular the Stellantis project (PSA – Fiat) which invested 50 million euros in the company Vulcan Energy for the extraction of lithium.
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