Tesla has already begun construction on its new lithium refinery in Texas, with the goal of producing enough battery-grade lithium to generate one million electric cars (EVs) per year by 2025, making the company the largest North American processor of the material.

What the Massive Lithim Refinery Means for Tesla

Tesla will be able to refine its lithium at the factory, making it the only major manufacturer in North America to do so. 

It is also important to note that the United States was once the most prominent lithium refinery force in the 1990s before economies like China eclipsed its production.

Reuters tells us that the decision represents a substantial divergence from Tesla's core emphasis on automotive manufacturing and demonstrates its ambition to fulfill its lofty EV sales targets.

CEO Elon Musk noted at the groundbreaking ceremony, "As we look ahead a few years, a fundamental choke point in the advancement of electric vehicles is the availability of battery-grade lithium." 

He went on to say that the corporation planned to finish building the factory next year and begin full production a year later.

According to WEF data, China, the third-largest lithium producer, has a firm foothold in the supply chain. 

In addition to developing domestic mines, Chinese corporations have acquired approximately $5.6 billion in lithium assets in Chile, Canada, and Australia over the past decade. It also holds 60% of the world's lithium refining capacity.

How Tesla Will Handle the Lithium Refining Process

Texas Governor Greg Abbott attended the ceremony and expressed his support for the project, saying, "Texas wants to be able to be self-reliant, not dependent upon any foreign hostile nation for what we need. We need lithium."

Although Musk did not specify how much lithium the factory would handle each year, he did state that the automaker would continue to purchase the metal from its vendors.

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One of these is Albemarle, which plans to develop a lithium processing facility in South Carolina to refine 100,000 tonnes of the metal annually. Construction is planned to begin next year, and the project is expected to open later this decade.

Reuters reports that Tesla will forego the lithium industry's traditional refining process, which depends on sulfuric acid and other harsh chemicals, in favor of environmentally friendly materials such as soda ash. 

Musk claims that Tesla's approach uses fewer dangerous reagents and produces useable byproducts compared to the standard procedure.

Tesla Brings the Business to Texas

CNBC tells us that the business intends to build "facilities to support other types of battery materials processing, refining, and manufacturing, as well as ancillary manufacturing operations in support of Tesla's sustainable product line." 

Tesla's refinery is part of a larger goal to create a closed-loop supply chain for its batteries.

This is not Tesla's first attempt to enter the lithium production market. Musk told shareholders in 2020 that Tesla had won the rights to 10,000 acres in Nevada, where it planned to mine lithium from clay deposits, which had never been done commercially before. 

Tesla has been growing its activities in Texas in addition to the new lithium plant. In 2021, the firm relocated its headquarters from California, and Musk's other companies, including SpaceX and The Boring firm, also have operations in Texas.

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