Elon Musk urges entrepreneurs ‘please refine lithium’ as EVs face choke level

Tesla (TSLA) CEO Elon Musk this previous week reminded buyers of a rising problem within the US on the subject of the electrical car business — securing refined lithium for EV batteries.

“The choke level is way more on refining capability than it’s on mining. Lithium is definitely is quite common all through the world, together with within the US,” Musk mentioned on Tesla’s earnings name. “It is way more a query of the place is the refining capability and might the refining capability sustain.”

Musk highlighted Tesla’s plan for a lithium refinery close to Corpus Christi, Texas which breaks floor in Might.

Musk additionally took the chance, as he is performed up to now, to name on different entrepreneurs to refine extra of the mineral utilized in batteries to energy electrical autos.

“Like, as a substitute of constructing an image sharing app, please refine lithium. Mining and refining, heavy business, come on,” mentioned Musk.

Tesla CEO Elon Musk speaks earlier than unveiling the Mannequin Y on the firm’s design studio in Hawthorne, Calif. Musk will face the electrical automobile maker’s shareholders in the course of the firm’s annual assembly on Tuesday, June 11, 2019. (AP Photograph/Jae C. Hong, File)

‘The place is all the fabric going to come back from?’

At present, a lot of the world’s lithium refining occurs in China and is directed on the nation’s personal rising EV market.

However the Biden Administration’s push in the direction of greener applied sciences is about to create large demand for lithium right here within the US.

“We at the moment within the US produce round 20,000 tons of lithium hydroxide refined within the US. We predict we’d like over 700,000 by the second half of this decade. So, 35 occasions extra,” Keith Phillips, CEO of Piedmont Lithium, whose prospects embody Tesla and LG Chem, advised Yahoo Finance in an interview.

“All of this is a bit more future dealing with — and the query I feel is — the place is all the fabric going to come back from?”

Piedmont Lithium is the method of constructing an built-in mine and refinery in North Carolina, in addition to a refining facility in Tennessee. The corporate can also be concerned with tasks in Quebec and Ghana.

“We want extra of each,” mentioned Phillips. “We want extra refinery capability, clearly. As a result of you possibly can’t make a battery with [rocks]. You want refined chemical compounds. And the determined want — I feel — is for extra uncooked materials out of the bottom. And the extra of that we will produce within the US the higher.”

Lithium reserves have been recognized within the US. Nonetheless mining tasks final a few decade to finish. Refineries take about two years to convey on-line.

“You’ll be able to’t simply flick a swap and convey extra metals to the market,” Financial institution of America analyst Michael Widmer lately advised Yahoo Finance Reside.

Widmer’s analysis reveals nations world wide should deal with quite a few metals and mining shortages, together with lithium, copper, nickel, and aluminum.

“Backside line … for lots of the commodities, we’re simply not sinking sufficient cash into the bottom for the time being,” Widmer mentioned.

‘Lithium has dropped quite a bit’

Lithium costs peaked in 2022 and have since fallen greater than 50%.

Musk — who final April highlighted lithium costs had risen to “insane ranges!,” made be aware of their decline this previous week.

“Lithium has dropped quite a bit. It is price mentioning that value of lithium has dropped considerably,” Musk mentioned on the decision.

Lithium prices have dropped rapidly this year. (Source: Reuters)

Lithium costs have dropped quickly this yr. (Supply: Reuters)

Falling commodity prices are anticipated to assist Tesla’s margins as strikes from the EV maker to slash the worth of its vehicles in China and the US weighed on income in its newest quarter.

Regardless of lithium’s decline, nevertheless, costs are up about 3 times from two years in the past, and comes at a time when the transition to EVs continues to catch the attention of most automakers.

Ford (F), for example, lately introduced plans to construct a brand new $3.5 billion EV battery plant in Michigan in partnership with a Chinese language provider.

“I feel within the very long term, when extra mines are found, when extra refineries are constructed, when recycling turns into an element, you already know, 10 plus years from now, I feel this market will look much more like a copper or an oil the place the availability demand stability is extra in sync,” Piedmont Lithium’s advised Yahoo Finance.

“Proper now. Essentially, there aren’t practically sufficient mines and refineries constructed to serve all of the battery crops which are being constructed. The lithium business is absolutely enjoying catch up.”

Ines is a senior enterprise reporter for Yahoo Finance. Comply with her on Twitter at @ines_ferre

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