Tesla boss Elon Musk has new plans to cut the cost of lithium-ion batteries that electric car manufacturers use. The global automotive industry is seeking to secure the raw materials needed to expand the battery capacity of electric vehicles.
Tesla, led by Elon Musk has its own plans for the electric vehicle battery supply chain. The electric car maker is entering a new part of the battery supply chain that is a license to print money, according to CEO Elon Musk.
Tesla’s potential new business is lithium refining. The auto company proposes a new facility in Texas to produce lithium hydroxide, a key component in high-performance lithium-ion batteries, Bloomberg reported, according to a recently released permit application.
The refining plant is “the first of its kind in North America“, Reads the application. Most of the lithium ore comes from Australia and South America and ends up being refined in China.
Boom in lithium prices is reflected on EV business
Prices of refined lithium have gone from a low of less than $ 6.000 per ton to more than $ 71.000 per ton in recent years. Rising lithium prices added approx $ 2.000 at the price of an average electric vehicle over that period of time. Poor refining capacity and local refining capacity is why Tesla is considering the move.
The request for approval states that construction could begin in 2022 with thestart of production in 2024.
“Lithium is actually very common, practically everywhere, but you have to refine the lithium into lithium carbonate and lithium hydroxide for batteries, which must be extremely high purity,” Musk explained during the company’s second-quarter earnings conference call. “Right now there is software edge in lithium processing. So I would really like to encourage entrepreneurs to enter the lithium refining business once again. You can’t lose. It’s a license to print money ”.
Tesla outperforms its competitors
Traditional car manufacturers also want to produce far more electric vehicles. Both Ford Motor and General Motors aim to sell around 2 million electric vehicles a year each by 2025 or 2026. Both companies are investing billions of dollars in domestic battery capacity.
GM also partnered with POSCO Chemical to build what amounts to a battery component plant in the United States. The entire automotive industry is vertically integrating into battery supply.
Tesla appears to be the first to enter lithium refining. It probably won’t be the last
Elon Musk’s new business venture seems to appeal to investors, Tesla shares continue up 2.7% to $ 297 per share, which is +43% from the annual lows of $ 206.86 per share as of May 24. In the last week, Tesla’s balance is about + 10%.