Tesla Stock: Company Considers Texas Lithium Refinery, As China Controls Global Capacity

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Tesla (TSLA) is eyeing the prospect of building a lithium processing facility in Texas, as the company looks to take more control over key manufacturing components amid rising prices. Tesla stock was up on the news.




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In documents submitted to the Texas Comptroller’s Office, Elon Musk’s electric vehicle giant is evaluating the facility — which would refine lithium hydroxide — on the Gulf Coast of Texas. Reuters first reported on the filing of the documents.

Tesla said the facility would develop “battery-grade lithium hydroxide” and process “raw ore material into a usable state for battery production,” the company’s filing said. The company added in its letter to the Texas Comptroller’s Office that the plant would be the first of its kind in North America.

If the project is approved, Tesla says it could start construction by the fourth quarter, with commercial production beginning by the end of 2024.

Tesla added it is simply “evaluating the feasibility of this project” and that “only very preliminary development activities have begun,” the filing said.

Who Controls Lithium?

The price of lithium has jumped around 120% in 2022, according to Benchmark Mineral Intelligence. Some analysts estimate these increased prices could add around $1,000 to the cost of a new vehicle.

The majority of the globe’s lithium resides in an area of South America known as the “Lithium Triangle.” This region is made up of Chile, Bolivia and Argentina. Roughly 58% of the world’s lithium resources are found in these three countries, according to the 2021 U.S. Geological Survey Mineral Commodity Summary.

Currently, China has a stranglehold on the world’s lithium refining capacity, accounting for about 75% of the global production in 2021, according to the Internal Energy Agency.

With Tesla looking to build its own refining plant in North America, it could challenge China’s dominance. Meanwhile, it can also take advantage of billions of dollars in EV incentives in the recently signed Inflation Reduction Act.

There are benchmarks EVs must meet to be eligible for tax credits. By 2024, EV batteries must have at least 40% of minerals extracted or processed domestically. The other option is a country that has a free-trade deal with the U.S. That would rise to 80% in 2027.

If Musk goes ahead with the plan, lithium refining would come on line by 2024. In Tesla’s second-quarter earnings call in late July, Musk hinted to investors the company could enter the lithium business.

“I would really like to encourage, once again, entrepreneurs to enter the lithium refining business. You can’t lose. It’s a license to print money,” Musk said.

Tesla Stock

Tesla stock was up around 1.5% before Friday market trading. The stock had increased nearly 2% to 289.26 Thursday during market trading, and now are rising toward its 200-day moving average.

CNBC reported Thursday night there has been a leadership change at Tesla’s Gigafactory, its large battery production plant in Nevada. Chris Lister, former vice president of Gigafactory operations, has left Tesla. Hrushikesh Sagar has been promoted to oversee the Gigafactory, according to CNBC.

Sagar reports directly to Musk and will be overseeing Tesla’s vehicle assembly plant in Fremont, Calif., along with the Gigafactory.

Meanwhile, local press reports in Germany show the country’s federal motor transport authority has found “abnormalities” during its investigation into Tesla vehicle’s autopilot capabilities.

German regulators have been looking into Tesla’s automatic lane change feature since the beginning of the year. There is concern the device may be illegal in Europe.

Please follow Kit Norton on Twitter @KitNorton for more coverage.

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