Tesla is jumping into a new business venture to extend its own supply chain in the manufacture of its cars and batteries.
Companies around the world are competing to source raw materials needed to make batteries for electric vehicles (EVs), and Tesla CEO Elon Musk has been taking note. Tesla’s potential new business is lithium refining.
Refined lithium prices have increased dramatically in recent years. Prices have gone from a low of less than $6,000 a metric ton to more than $71,000 a metric ton.
The company is proposing a new facility in Texas to produce lithium hydroxide, a key component in higher performing lithium-ion batteries, according to a permitting application recently made available, reports Bloomberg.
Why it’s important
The number of people wanting EVs has hit a tipping point, more than half of car buyers worldwide want EVs.
The latest EY Mobility Consumer Index shows that 52% of people looking to buy a car want to buy an EV. This is the first time the number has exceeded 50%, representing a rise of 11 percentage points since last year.
In order to make more EVs, companies need more battery power which can be expensive to source.
Majority of the lithium ore used is from Australia and South America and is refined in China, so this facility would be “the first of its kind in North America,” according to the permit application.
The increase in lithium prices has added very roughly $2,000 to the price of an average EV over that span. The lack of refining capacity, and local refining capacity, is the reason Tesla is considering the move, reports Barron’s.
By bringing this lithium refining facility to the U.S. it would decrease prices for EVs as well as let America not be reliant on other countries for the materials.
Tesla has not commented on the project as of now, but the permit application says construction could begin in 2022 with production beginning in 2024.