Tesla aims to enter lithium mining and refining, hints Elon Musk

Tesla CEO Elon Musk took to micro-blogging site Twitter on Saturday to hint that the EV maker could enter into lithium mining and refining directly at scale in an attempt to reduce the production cost of EVs. Musk voiced his concern against the rising cost of lithium, the key mineral used for making electric vehicle batteries.

He said that price of lithium has gone to insane levels. Musk further added that Tesla might actually have to get into the mining & refining directly at scale, unless costs improve. “There is no shortage of the element itself, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow," Tesla CEO further added. Musk also said that the company has some cool ideas for sustainable lithium extraction and refinement.

Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale, unless costs improve.

There is no shortage of the element itself, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow.

— Elon Musk (@elonmusk) April 8, 2022

Previously, Tesla entered into battery manufacturing rather than sourcing its batteries from suppliers. Now, the US electric car brand aims to enter into the lithium mining and refining sector as well. This would give the automaker total control of its entire ecosystem, reducing dependence on the suppliers. Also, with direct entrance into the lithium mining and refinement sector, tesla will be able to scale the production of its EV batteries and vehicles subsequently. Also, the automaker will be able to sell its cars at more competitive pricing as well, with a reduced production cost.

Lithium is the prime rare earth mineral used for making lithium-ion (Li-ion) or lithium-phosphate (LFP) batteries. While the price of lithium was $4,450 per tonne in 2012, ten years later the price has soared to a whopping $78,032 per tonne. Interestingly, the price of lithium was significantly lower even last year as well. Lithium was priced at $17,000 per tonne in 2021, reveals Elon Musk's tweet. Tesla's entrance into the lithium mining and refinement sector could inspire other automakers too to plunge into the segment. This would reduce Chinese and South Korean battery manufacturers' dominance in the sector.