Tesla breaks ground on Lithium Refinery in Texas
Concept of Tesla’s lithium Refining facility, Corpus Christi, Texas
As the worldwide demand for lithium grows ever stronger, it's odd to see so few companies entering the industry, especially when there's so much financial incentive to do so. Elon Musk has said on several occasions it's essentially “free money” and he's at the forefront of the industry thanks to Tesla's unending need for raw battery materials, having decided to manufacture their own cells due to low industry supply and performance, they've since realised it's necessary to take the next step into metal refining.
“So it is basically like minting money right now. There’s like software margins in lithium processing right now. So I would really like to encourage, once again, entrepreneurs to enter the lithium refining business. You can’t lose. It’s a license to print money,” - Elon Musk
This intention was announced during their Battery Day Event back in 2020 and sure enough the years flew by and here we are, Tesla officially began construction of their Lithium Refining Facility near Corpus Christi, Texas, at their Groundbreaking ceremony on the 8th May 2023. It's expected to begin commissioning at the end of 2023, ramping up to 60 GWh/year capacity, producing enough battery material to build roughly 1 million electric vehicles by 2025, and making them the largest processor in North America.
Cybertruck Sneak Peak
Also on display was a Cybertruck adorned with a custom tool-rack and frame over the rear, the following were screen grabbed from @esherifftv’s video from the event, check out their space to watch the whole thing and show your appreciation!
The Cybertruck is currently being produced in Giga Texas and is expected to begin delivery this Summer, with mass-production ramping up into next year. With fresh, rough estimates of around 250,000/year depending on demand, but considering there are already well over a million reservations, I don’t imagine too many people want to wait another four years for their truck, so I hope they’re able to scale that more quickly.
History of lithium refining
Historically lithium has been harvested from vast pools of water pumped through underground deposits that are left to evaporate in the sun, common in places like Chile and Argentina. It's a relatively passive process that depends on the weather to refine the product, which naturally doesn't always go to plan and due to this there can be a substantial lead time. Producers are also feeling the pressure of rapid expansion and this kind of inorganic growth can often lead to corners being cut. Overall it's a far from ideal system and one that's seen little innovation in decades.
Salinas Grandes on Argentina Andes is a salt desert in the Jujuy, popular among mining companies for it’s lithium deposits
Thanks to the electronics boom, lithium has been used in almost every kind of battery of the digital age, from smart phones & laptops, to electric vehicles, and it's never been more popular. Tesla estimates that 20 TWh/year of battery production is required to achieve a sustainable energy future, yet the limited refining capacity of this extremely desirable element is one of the main drivers in slowing EV adoption, since most manufacturers simply can't build or buy batteries quickly enough as ever more companies scramble to join the tide.
The faster we can make battery packs, the faster we can transition to a sustainable energy future - Elon Musk, Tesla Shareholder Event, May 2023
The Tesla Method
In their usual fashion, Tesla decided there was a much better way of doing things and are pioneering an entirely non-destructive method of extraction. Basically removing the top layers of earth and pumping through a saline solution to displace the lithium, then replacing it in the hole to leave no trace. Apparently there's sufficient resources in the state of Nevada alone to convert the entire US fleet to electric, in easily accessible surface clay deposits of which they have secured a 10,000 acre site (2 TWh equivalent deposit) so it's bizarre these have not yet been tapped and it falls on Musk yet again to steer the industry in the right direction.
The mining part of the plan is still being developed, but in the meantime there’s plenty of raw material potential in the world. So the refinery is being constructed as soon as possible to turn mostly spodumene into an extremely pure, battery-grade product required to achieve the energy density needed for EVs today. Their facility will run a sulfate-free refining process, powered completely by renewable energy. It will be capable of producing lithium 33% cheaper than the industry average, and will eventually be co-located with their upcoming cathode plant - to take care of the other side of things.
Alternative Thinking
Tesla already build Lithium Iron Phosphate (LFP) cells that contain no cobalt and have greater longevity, at the cost of lower density. These are mostly found in cars produced in China, dependent on model, and as such a lot of imports to other markets utilise these cells (like our Standard Range Plus Model 3 for example). New dry-coated electrodes used in their structurally-integral 4680 cells use varying amounts of Nickel instead of Iron, smaller amounts for low-range vehicles, a Nickel & Manganese mix for medium range, and high Nickel density for long-range applications. Surely new breakthroughs are due to follow in the coming years to render these obsolete, but for now they promise to beat all others in terms of cost and energy density.
Tesla have made it perfectly clear on multiple occasions that they do not want to have to get into the mining or refining business, but they simply have no choice because there are no other options. They continue to purchase huge amounts from external suppliers and are now forced to enter an entirely new domain just to satiate their own needs. How on earth is any other company going to compete with that? Ford’s EV division recently announced their profit margin in Q1 2023 as a dizzying -102% (down from -40% Q4 2022) and yes you read that right, they lose more than the sale cost of the car! Granted that number fluctuates based on many factors and will likely improve, but can it even get close to Tesla's staggering (positive) double-digit profit margins?
Perhaps this will become yet another industry dominated by the American juggernaut that doesn’t stop, storming ahead in technological leaps of engineering, but there's still a vast supply vacuum that needs to be filled and given the simplicity of the process, the potential return in the future is unimaginably high. One of the most surprising things, though, is that until we depart into radically different battery chemistry across the board, sources of clean, cheap lithium are essentially the gold-rush of the 21st century and not that many people seem to realise. If you have any inclination at all, now is the time to get into the lithium refining business!