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 windfall it can bring in.
In recent months, the cost of lithium has soared: 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 total price of the car (as is the case with the Tesla Model Y), we better understand the reasons that lead car manufacturers to try to find solutions to acquire 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 set up a lithium refining plant in Texas and has filed a formal request with the authorities. It says that the company wants to transform raw lithium into a material that can be used to manufacture batteries. The objective is to produce the lithium hydroxide needed to produce battery cells for electric cars, and in particular Tesla’s 4680 cells.
If this request is successful, Tesla will be able to launch the construction site from the fourth quarter of 2022 to launch commercial production from the end of 2024 as we can read in the document.
Note, however, that this plant would not be a mine at all and would therefore not be used to extract lithium. Tesla would then still have to continue to obtain raw lithium in order to transform it to obtain the purity necessary for the manufacture of batteries.
What to print money according to Elon Musk
Refineries are nevertheless very important in the field of electric cars. Elon Musk indeed recalled a few months ago that a refinery was more or less the equivalent of an authorization to create money. The American billionaire clarified during a conference call with investors that margins were very high in this areasimilar to what is done in the software industry.
Remember that Tesla would also like to get into the lithium extraction business. The American company announced in 2020 that it had purchased a 10,000 hectare mine in Nevada. With the ambition of using much “cleaner” methods to extract lithium from the subsoil. But for the moment, the project seems to be at a standstill.
Towards a drop 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 succeeding in lowering the cost of batteries that it will become possible to offer more affordable electric cars. If Elon Musk promised that the price of electric cars from Tesla will reduce with the fall in inflation, other methods will make it possible to achieve this.
This is particularly the case of the 4680 cells of the new Tesla batteries, which should make it possible to reduce the manufacturing costs of the Model Y, while making possible the mass production of the Tesla Semi truck and the Cybertruck electric pickup.
The internalization of the extraction and refining of lithium are also avenues considered by car manufacturers. We can notably cite the Stellantis project (PSA – Fiat) which invested 50 million euros in the company Vulcan Energy for the extraction of lithium.
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