Tesla plans lithium refinery in Texas to boost EV battery business

Tesla e-vehicles

Tesla is considering setting up a lithium refinery on the gulf coast of Texas, as it looks to secure supply of the key component used in batteries amid surging demand for electric vehicles (EVs).

Tesla’s proposed battery-grade lithium hydroxide refining facility will process raw ore material into a usable state for battery production, the company said in an application filed with the Texas Comptroller’s Office

A decision to invest in Texas will also be based on the ability to obtain relief on local property taxes, Tesla said.

Elon Musk has previously said that Tesla may have to enter the mining and refining industry directly at scale as lithium prices surge, Reuters news report said.

Construction could begin in the fourth quarter of 2022 and would reach commercial production by the end of 2024, Tesla said in the application dated Aug. 22.

Tesla aims to ship the final product from the refinery by trucks and rail to Tesla battery manufacturing sites supporting the supply chain for large-scale and electric vehicle batteries.

Lithium prices have skyrocketed this year due to surging demand from the auto sector. China remains the world’s largest lithium processor, though proposed rival projects in the United States and European Union have faced a range of setbacks.

Tesla could become the first in the sector to invest directly in lithium refining as automakers scramble to stitch up deals with miners and refiners.

Tesla signed a 5-year supply deal with Australia’s Liontown Resources earlier this year, while rival EV makers Stellantis and Byd have invested in miners.

CATL, the world’s biggest battery maker, has also taken stakes in lithium miners.