Tesla considers Texas lithium refinery, seeks tax cuts

CNN business


Inc (TSLA) is considering setting up a lithium refinery on the Texas Gulf Coast to ensure supplies of key components used in batteries as demand for electric vehicles soars.

A potential battery-grade lithium hydroxide refinery, touted by Tesla as the first of its kind in North America, will process “raw material ore to a condition that is usable for battery production,” the company said in Texas state treasurer. It was stated in the application submitted to the Board of Inspection.

Tesla said its decision to invest in Texas was also based on its ability to receive local property tax relief.

CEO Elon Musk has previously said Tesla may need to enter the mining and refining industries directly on a large scale as lithium prices skyrocket.

Musk has also been vocal about the need for more players in the lithium refining industry. “We can’t lose. We’re licensed to print money,” he said on the company’s second-quarter earnings call.

Securing a stable supply of battery components is considered very important for Tesla, which faces intense competition in the rapidly growing electric vehicle market.

If approved, construction could begin in the fourth quarter of 2022 and reach commercial production by the end of 2024, Tesla said in an application dated Aug. 22.

Under the plan, Tesla will ship finished products from refineries by truck and rail to various Tesla battery manufacturing sites that support the supply chain for heavy-duty and electric vehicle batteries.

Tesla, whose shares rose 1.4% in premarket trading, also said the reagents it uses are less hazardous and produce usable by-products compared to traditional processes.

A surge in demand from the automotive sector has pushed the price of lithium skyrocketing this year. China remains the world’s largest lithium processor, but proposed rival projects in the US and European Union are facing setbacks.

If Tesla’s plans go ahead, Tesla could become the first company in the industry to invest directly in lithium refining as automakers rush to close deals with miners and smelters.

Arpit Agarwal, director of EV-backed venture capital firm Blume Ventures, said: Startups such as Euler Motors and Yulu.

Tesla also stands to benefit from reduced logistics costs and potential incentives from the U.S. government, he added.

Battery makers are also looking to ramp up production in the U.S., which could increase the shift to EVs as the country implements tougher regulations and enhances tax credit eligibility.

Tesla itself signed a five-year supply deal with Australia’s Liontown Resources earlier this year, while rival EV makers Stelantis and BYD are investing in miners around the world.

CATL, the world’s largest battery maker, is also an investor in Lithium Miner.

Source: www.cnn.com

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