Tesla Inc (TSLA) plans to set up a lithium refinery on the Gulf Coast of Texas as it seeks to secure supply of the key component used in batteries amid growing demand for electric vehicles.
The potential battery-grade lithium hydroxide refining facility, which Tesla has touted as the first of its kind in North America, will process “raw ore into a usable state for battery production,” the company said in a statement. an application filed with the Texas Comptroller’s Office. .
A decision to invest in Texas will also be based on the ability to obtain local property tax relief, Tesla said.
Chief Executive Elon Musk has previously said Tesla may have to enter the large-scale mining and refining industry directly as lithium prices rise.
Musk also expressed the need for more players in the lithium refining industry. ” You can not lose. It’s licensed to print money,” he said on the company’s second-quarter earnings call.
Ensuring a steady supply of battery components is seen as essential for Tesla as it faces fierce competition in the rapidly growing electric car market.
If approved, construction could begin in the fourth quarter of 2022 and reach commercial production by the end of 2024, Tesla said in the August 22 filing.
Under the plan, Tesla will ship the refinery’s end product by truck and rail to various Tesla battery manufacturing sites supporting the electric vehicle and large-scale battery supply chain.
Tesla, whose shares rose 1.4% in premarket trading, also said it would use less hazardous reagents and create usable byproducts, compared to the conventional process.
Lithium prices have skyrocketed this year due to strong demand from the automotive sector. China remains the world’s largest processor of lithium, although rival projects proposed in the United States and the European Union have faced a series of setbacks.
If Tesla’s plan comes to fruition, the automaker could become the first in the industry to invest directly in lithium refining as automakers scramble to strike deals with miners and refiners.
“Automakers are trying to ensure that they have control of the lithium supply, protecting against any geopolitical situations that may arise in the future where supply is disrupted,” said Arpit Agarwal, chief executive. from venture capital firm Blume Ventures, which has backed EV startups like Euler Motors and Yulu.
Tesla also stands to gain from lower logistics costs as well as any incentives it might get from the US government, he added.
Battery makers are also looking to increase production in the United States, where a shift to electric vehicles could increase as the country implements tougher regulations and tightens tax credit eligibility.
Tesla itself signed a five-year supply deal with Liontown Resources in Australia earlier this year, while rival electric vehicle makers Stellantis and BYD have invested in miners around the world.
CATL, the world’s largest battery maker, has also taken stakes in lithium miners.
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