Tesla, the American electric vehicle (EV) pioneer, has taken another significant step toward reducing its dependence on external suppliers for critical materials. On Monday, the company broke ground on its own lithium refinery in Texas, making it the first U.S. automaker to refine lithium in-house.
The new refinery will produce enough battery-grade lithium for 1 million electric vehicles by 2025, making Tesla the largest processor of lithium in North America. The move is a significant shift for Tesla, which, until now, has relied on suppliers like Albermarle and Livent for its lithium needs.
Why Lithium Matters for EVs?
Lithium is a critical material in the production of lithium-ion batteries, which power the EV revolution. Currently, the U.S. produces only 1% of the world’s lithium, with Australia, Chile, and China leading the way. To reduce its reliance on China, which hosts the majority of the world’s lithium refining and battery production capacity, the Biden administration has introduced EV tax credits aimed at spurring domestic battery material sourcing and production.
What Did Elon Musk Say at the Groundbreaking Ceremony?
During the groundbreaking ceremony, CEO Elon Musk acknowledged that the availability of battery-grade lithium is a fundamental choke point for the advancement of EVs. Musk’s Cybertruck, complete with a roof rack accessory, also caught the attention of industry watchers. The event was attended by government officials, including Texas Governor Greg Abbott, Nueces County Judge Connie Scott, and Deputy Assistant Secretary at the U.S. Dept. of Energy Kathleen Hogan.
When Will the Lithium Refinery be Operational?
Tesla aims to complete construction on the refinery next year, with full-scale production slated for 2025. Musk described this timeline as “extremely fast by normal standards.” However, it is slower than Tesla’s original projection, announced during its Investor Day in March. At that time, the company aimed to have the refinery operational by the end of this year and start production early next year.
How Much Will Tesla Invest in the Lithium Refinery?
Tesla will invest $375 million in building the facility, according to filings with the Texas Comptroller. The new refinery is Tesla’s latest expansion into Texas, following the company’s move of its headquarters to the state from California in 2021. Last year, Tesla invested nearly $6 billion in its Austin gigafactory. In January, the automaker announced plans to invest an additional $770 million to expand the factory, including cathode and drive unit manufacturing and a battery cell testing site.
Tesla’s new lithium refinery is a significant step toward achieving its goal of vertically integrating its battery supply chain. It also highlights the importance of lithium as a critical material for EVs and the need for more domestic battery material sourcing and production. With Tesla leading the way, other startups are likely to follow suit, further expanding the domestic battery industry. The result will be a more robust and sustainable EV ecosystem that will benefit everyone.