Tesla says lack of lithium refining capacity will become EV production ‘choke point’

Dive Brief:

  • Tesla saw commodity prices for minerals, including lithium, begin to drop in Q1, the company said on its Q1 earnings call last week.
  • But the “choke point” in the supply chain is not in the price of the material but the capacity to refine it, CEO Elon Musk said, and if production can continue to match demand.
  • To further take control of its lithium supply, the company plans to start production by the end of this year on its own refinery in Corpus Christi, Texas, Drew Baglino, senior vice president of powertrain and energy engineering, said during Tesla’s investor day presentation last month.

Dive Insight:

Tesla is spending big on its lithium refining capacity.

Its upcoming refinery in Texas is slated to have 50 gigawatt hours of capacity per year. The company also strategically placed its manufacturing hub in Nevada near the country’s only active lithium producer.

In addition, Tesla is spending another $3.6 billion to expand its own manufacturing footprint in Nevada, including for lithium-ion battery production.

Musk boasted of Tesla’s lithium refining capacity during the call with investors, while chastising others in the industry for a lack of involvement.

“We will have, by far, the most lithium refining capability and the most cathode refining capability in North America,” the CEO said. “So, can other people please do this work? That would be great. We’re begging you. We don’t want to do it. Can someone please?”

On pricing, executives noted that while they saw some softening in Q1, they expect to see more benefits in the Q2 and the second half of the year.

Previous price spikes also spurred more companies in the industry to explore diversifying their procurement strategies from countries across the globe, Vice President of Supply Chain Karn Budhiraj said on the call.

“A lot of the companies that are in this business are becoming more ambitious about finding more upstream resources and exploring locations in Africa as well as South America,” Budhiraj said. “So that’s also helping the macro situation with pricing.”

Lithium prices have fallen significantly in the last several months, particularly in China, which holds the bulk of the world’s lithium reserves. Chinese prices for the mineral have fallen 52.4% since peaks in November 2022, according to an April market analysis from S&P Global.

via Utility Dive

Categories: Energy