Tesla took a step forward to solidify its battery supplies. The EV maker broke ground on a lithium refinery project in Texas on May 8. The facilities will primarily process lithium hydroxide to support one million EVs annually by 2025, according to Tesla.
US-based CNBC reported that Tesla will construct the refinery in Corpus Christi, a city on the Gulf of Mexico, with an investment of US$375 million.
Filings with the Texas Comptroller's office showed the company plans to build a battery-grade lithium hydroxide refining facility and additional facilities to support other types of battery materials processing, refining and manufacturing, according to CNBC.
At a ground-breaking ceremony on Monday, Tesla CEO Elon Musk said the company plans to complete construction in 2024 and reach full production about a year later. Reuters reported that Tesla did not specify the production volume of the refinery but said it would make enough battery metal to supply about one million EVs, making it the largest processor of the material in North America.
Musk also said the availability of battery-grade lithium is a fundamental choke point in the advancement of EVs in the following years. He added that Tesla intends to keep purchasing lithium from its suppliers, regardless of maintaining its own refinery.
According to Reuters, US-based chemical suppliers Albemarle and Livent sell Tesla the metal. In March, Albemarle announced a US$1.3 billion lithium processing project in South Carolina. Construction of the refinery is expected to start next year, with operation beginning later this decade.
Currently, China takes up more than half of global lithium processing and refining capacity, according to the International Energy Agency. The US only controls about 1% of the volume.
Texas Governor Greg Abbott, who joined the ceremony on Monday, said Texas wants to be self-reliant, not dependent upon any hostile foreign nation for what it needs, namely lithium.
The metal's price has been falling after surges in the past two years. At a conference call in April, Tesla said the decreasing lithium price would help the company's margins in the second half of this year.
