Tesla Inc. plans to process lithium at a plant it is building in Texas as demand for the key material used to make electric vehicle batteries ramps up around the globe.
Elon Musk, CEO of the Austin, Texas-based electric vehicle maker, said his company is focusing on refining the material instead of mining it. The lithium refinery plant is being built near Corpus Christi, Texas, about 200 miles south of Tesla's headquarters in Austin, where property records show Tesla bought at least 1,600 acres last month.
Musk was speaking at Tesla's investor day this week and announced plans to build a new vehicle assembly plant in Monterrey, Mexico, and expand production at its existing factories, including those in California, Nevada and Texas.
He said lithium is a common element and there is no threat of it running out. The problem with lithium, according to Musk, is it is difficult to refine and process. This means that means no one — not a country nor an automobile manufacturer — has a monopoly on lithium, Musk said.
Demand for lithium has been growing among electric vehicle battery manufacturers in recent months, mostly because of an increase in sales for and the anticipated demand of electric vehicles. The increased demand for lithium also means a significant jump in costs. A recent report on lithium battery manufacturing by McKinsey found the cost of lithium skyrocketed 550% between 2021 and 2022.
McKinsey also reported that about 98% of lithium production in 2020 occurred in Australia, China and Latin America.
Lithium Refinery
The lithium refinery plant in Robstown, Texas, could start production by the end of the year, Tesla's executives said. The plant is expected to have an annual capacity of 50 gigawatt hours of electric vehicle battery production, according to Drew Baglino, Tesla's senior vice president of powertrain.
A factory generating one gigawatt hour could produce enough batteries each year to power between 10,000 and 20,000 electric vehicles, according to the Federal Reserve Bank of Dallas. So, Tesla's plans to generate 50 gigawatt hours a year at the South Texas plant could theoretically power up to 1 million electric vehicles a year.
Tesla, which produced 1.3 million vehicles in 2022, has a goal of selling 20 million electric vehicles by 2030, according to the investor day presentation.
The South Texas plant would process lithium and other raw materials that are mined elsewhere. For example, Tesla recently agreed to buy spodumene concentrate from a mine in the Canadian province of Quebec. Spodumene concentrate is a source of lithium and a necessary raw material for electric vehicle batteries.
Tesla applied and was approved for tax breaks for its proposed $375 million lithium refinery in South Texas last year with the local county commission and school district. The acreage Tesla purchased in February is at State Highway 77 and County Road 28, Nueces County property records show.
Once processed, battery-grade lithium hydroxide will be transported by truck and rail to Tesla's various battery manufacturing sites that support its supply chain, the company said in its application with the Robstown Independent School District.
The size of the lithium plant in Robstown was not immediately clear. Tesla didn't respond to requests for comment.
Separately, officials in Nevada approved $330 million in tax breaks Thursday for Tesla's plans to invest $3.6 billion to expand its operations in the state, Reuters reports.