Elon Musk Calls Entrepreneurs to ‘Refine Lithium’ as EVs Face Chokepoints


Tesla (TSLA) CEO Elon Musk last week reminded investors of the growing challenges in the U.S. regarding the electric vehicle industry. Securing purified lithium for EV batteries.

“The chokepoint is more in refining capacity than mining. Lithium is actually very common around the world, including in the United States,” Musk said on Tesla’s earnings call. “The question is where is the refining capacity and can the refining capacity be maintained?”

Musk highlighted plans for Tesla’s lithium refinery near Corpus Christi, Texas, to break ground in May.

Musk also used the opportunity, as he has done in the past, to encourage other entrepreneurs to refine more of the minerals used in the batteries that power electric vehicles.

“For example, instead of building a photo-sharing app, refine lithium. Mining and refining, heavy industry, go ahead,” Musk said.

FILE - In this March 14, 2019 file photo, Tesla CEO Elon Musk speaks at the company's design studio in Hawthorne, California, before unveiling the Model Y.  #39; Annual General Meeting on Tuesday, June 11th.  (AP Photo/Jae C. Hong, File)

Tesla CEO Elon Musk speaks before unveiling the Model Y at the company’s design studio in Hawthorne, California. Musk will face the electric car maker’s shareholders at the company’s annual meeting on Tuesday, June 11, 2019. (AP Photo/Jae C. Hong, File)

“Where do all the ingredients come from?”

Much of the world’s lithium refining now takes place in China, for its own growing EV market.

But the Biden administration’s push for greener technology is poised to create massive demand for lithium here in the United States.

“We currently produce about 20,000 tons of US-refined lithium hydroxide. Tesla and LG Chem said in an interview with Yahoo Finance.

“This is all a little bit more futuristic, and the question, I think, is where does all the material come from?”

Piedmont Lithium is the process of building an integrated mine and refinery in North Carolina and a refinery in Tennessee. The company is also involved in projects in Quebec and Ghana.

“We need more of both,” Phillips said. “Obviously, we need more refinery capacity. [rocks]You need refined chemicals. And the desperate need, I think, is to source more raw materials from the ground. And the more we can produce in the United States, the better.”

Lithium reserves have been confirmed in the United States. However, mining projects take about ten years to complete. It takes about two years for a refinery to come online.

Bank of America analyst Michael Widmer recently told Yahoo Finance Live:

Widmer’s research shows that countries around the world must contend with shortages of a number of metals and mining industries, including lithium, copper, nickel and aluminum.

“The bottom line is that for a lot of commodities, we’re just not putting enough money into it right now,” Widmer said.

“Lithium has fallen considerably”

Lithium prices will peak in 2022 and have fallen by more than 50% since then.

Musk — In April last year, the lithium priceInsane level!,” noted the decline over the past week.

“Lithium went down a lot. It’s worth mentioning that the price of lithium went down a lot,” Musk said by phone.

Lithium prices have fallen sharply this year.  (Source: Reuters)

Lithium prices have fallen sharply this year. (Source: Reuters)

Lower commodity costs are expected to boost Tesla’s profit margins as electric-car makers move to lower the prices of their cars in China and the U.S.

But despite lithium’s decline, prices have nearly tripled from two years ago, making the move to EVs a continued focus for most automakers.

Ford (F), for example, recently announced plans to partner with a Chinese supplier to build a new $3.5 billion EV battery plant in Michigan.

“Over the very long term, as more mines are discovered, more refineries are built, and recycling becomes an important factor, 10 years from now, this market will become more copper and copper-like. I think it’s going to be oil with a more balanced supply and demand,” Piedmont Lithium told Yahoo Finance.

“Right now. Basically, very few mines and refineries have been built to accommodate all the battery plants that are being built. The lithium industry is really catching up.”

Ines is a Senior Business Reporter at Yahoo Finance. Follow her on her Twitter. @ines_ferre

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