Elon Musk rides Cybertruck to announce huge Tesla Lithium refinery with capacity for one million EVs
Tesla will be shaking off its lithium dependency and earning federal tax credits in one fell swoop with its own refinery in Robstown, Texas. Tesla's CEO Elon Musk and Texas Governor Abbott broke ground on the largest EV battery-grade lithium refinery in North America which, when fully operational next year, will be able to produce enough lithium for one million electric vehicles right here in the US.
This would make Tesla the only big American car company that will produce its own lithium and will make it easier to fulfil the made-in-US subsidy requirements for getting the billions in tax credits doled out under the auspices of the Inflation Reduction Act.
"As we look ahead a few years, a fundamental choke point in the advancement of electric vehicles is the availability of battery grade lithium," said Elon Musk during the opening ceremony, but added that Tesla will continue using other suppliers. He is on record saying that this year Tesla may be able to produce close to two million electric vehicles, so the Texas refinery could supply up to half of the battery lithium it needs.
"Texas wants to be able to be self-reliant, not dependent upon any foreign hostile nation for what we need. and we need lithium," added Governor Abbott. Tesla has deals with mining companies that will supply the raw lithium spodumene concentrate, and intends to use the cleanest available method for refining it into EV battery-grade carbonate with common industrial materials like soda ash. "You could live right in the middle of the refinery and not suffer any ill effect," expanded Elon Musk.
Currently, most of the lithium processing and refining is done by Chinese companies, and Elon Musk has been clamoring that lithium refineries are a "license to print money" when lithium prices were sky high last year. During his last conference call with investors, Elon again urged other companies to go into the refinery business, too, so that Tesla doesn't have to do it all on its own.
This year, however, lithium prices dropped dramatically by more than 80% off their peak, easing the profit margin pressure on other EV makers, and making refining a bit less attractive from a business standpoint. Still, the made-in-US conditions for the new EV federal subsidies in the Inflation Reduction Act may offset the potential drop in lithium refinery margins.
With the percentage of battery raw materials that have to be sourced from the US or its free-trade countries increasing every year, the new Texas refinery could allow Tesla to continue profiting from the government's largesse up until the subsidies expire in 2032.
Increasing lithium refining capacity is critical to a sustainable energy economy—today, we're breaking ground on our in-house lithium refinery outside of Corpus Christi, TX.— Tesla (@Tesla) May 8, 2023
This facility will also prioritize the elimination of a challenging refinery byproduct (sodium sulfate).… pic.twitter.com/mBnDBLNrW7