Tesla plans a lithium refinery in Texas, seeks tax exemption

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Tesla plans a lithium refinery in Texas, seeks tax exemption

Tesla is considering setting up a lithium refinery in Texas and is seeking a tax exemption

Tesla Inc. is considering setting up a lithium refinery on the Texas Gulf Coast, as it looks to secure supply of a key component used in batteries amid rising demand for electric vehicles.

In a request filed with the Texas Comptroller’s Office, the company said the high-quality lithium hydroxide refining facility, which Tesla described as the first of its kind in North America, will process “a raw material into a usable state for battery production.” .

Tesla said that the decision to invest in Texas will also depend on the ability to obtain exemption from local property taxes.

CEO Elon Musk previously said that Tesla may have to enter the mining and refining industry directly on a large scale as lithium prices soar.

Musk has also been vocal about the need for more players in the lithium refining industry. “You can’t lose. It’s licensed to print money,” he said on the company’s second-quarter earnings call.

Securing a steady supply of battery components is critical to Tesla as it faces fierce competition in the rapidly growing electric vehicle market.

If approved, Tesla said in a request dated August 22, construction could begin in the last quarter of 2022 and reach commercial production by the end of 2024.

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Under the plan, Tesla will ship the finished product from the refinery by truck and rail to various Tesla battery manufacturing sites that support the large-scale electric vehicle battery supply chain.

Tesla, whose shares rose 1.4% in pre-market trading, said it will use less hazardous reagents and produce usable by-products, compared to the traditional process.

Lithium scramble

Lithium prices have risen significantly this year due to higher demand from the automotive sector. China remains the world’s largest lithium processor, although proposed competing projects in the United States and the European Union have faced a host of setbacks.

If Tesla’s plan goes ahead, the automaker could become the first in the sector to invest directly in lithium refining as automakers scramble to strike deals with miners and refiners.

said Arpit Agarwal, director of venture capital firm Blume Ventures, which has backed EV startups such as Euler Motors and Yulu.

He added that Tesla would also benefit from lower logistical costs as well as incentives it might get from the US government.

Battery makers are also looking to ramp up production in the United States, where the shift toward electric vehicles could increase as the country enforces stricter regulations and tightens tax credit eligibility.

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Tesla itself signed a five-year supply deal with Australian company Liontown Resources earlier this year, while rival EV firms Stellantis and Byd have invested in miners around the world.

CATL, the world’s largest battery maker, also acquired stakes in lithium miners.