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Tesla will build a lithium hydroxide chemical plant in Texas near the Gigafactory, marking the car company's first step towards in-house lithium production and reducing its dependence on third-party suppliers.
Benchmark Mineral Intelligence has confirmed that Tesla will build a spodumene recycling plant near Giga Texas. The company aims to launch production in Q4 2022. This complements Tesla's plans to also build a cathode plant in Texas.
An on-site chemical nickel spin-off, which becomes the center for battery materials production in the United States, will strengthen control over both nickel production and of the mid-stream of the battery to the EV supply chain.
The new conversion/refining plant will turn hard rock spodumene concentrate into lithium hydroxide for direct use in its battery cells—a process that traditionally occurs in China using Australia-sourced spodumene.
Most importantly, this step will save the company time, reduce costs, and also remove third-party suppliers from Tesla's supply chain. This, in turn, will help the company scale battery production more independently—minimizing exposure to the lithium market and potential supplier issues.
Tesla has developed its own lithium mining system using table salt sodium, which can reduce costs by 33%. “Nobody’s done this before, to the best of my knowledge, nobody’s done this,” Musk said during Battery Day. He explained that all elements are reusable. Basically, they can take a chunk of dirt, get the lithium out of it, and put a chunk of dirt back. "It’s a very sustainable way of obtaining lithium."
Battery Day: Tesla Is Getting Into The Lithium Mining Businesshttps://t.co/RMqeZwrCef— Tesmanian.com (@Tesmanian_com) September 23, 2020
Yesterday, Piedmont Lithium announced that it has signed a five-year deal with Tesla to supply high-purity lithium. Deliveries are scheduled from July 2022 to June 2023. Benchmark expects this to be just over half of Tesla's Terafactory needs in 2023, the first full year of production for 4680 lithium-ion batteries. Benchmark expects Terafactory to have 15 GWh capacity throughout 2023, as it grows to the expected 150 GWh by 2029.
Localizing lithium production is a strategy to increase control over the China-dominated supply chain, and to draw the sway of industrial power towards the US.
Simon Moores, managing director, Benchmark Mineral Intelligence said:
“Tesla is the first automotive OEM to enter lithium production - a watershed moment. And it does so without having to mine lithium from the ground. "
“Not only will it allow Tesla to control costs at this supply chain step, it will once again see the spodumene trade flows point towards the USA instead of China, a market that has dominated spodumene conversion for a generation through majors such as Tianqi and Ganfeng Lithium.
“It will also significantly bolster its negotiating power on its future lithium hydroxide contracts once it harnesses the ability to produce a consistent battery ready lithium hydroxide and scales capacity.
“Tesla has clearly come to the realization that it cannot rely on the upstream of the supply chain or investors to expand quickly enough for its needs.
“It has now taken some of that responsibility away from the miners and chemical producers and once Tesla gets to grips with the lithium refining process, scale will be introduced and we expect that post-2022 ramp to be rapid."
This move by Tesla in the field of lithium chemistry gives the company significant control over future trade flows of this raw material. And its relentless move towards vertical integration—in this case, with lithium from the ground to battery—will no doubt take Tesla several steps forward in its mission to catalyze global sustainable energy.
© 2020, Eva Fox. All rights reserved.
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