PREPARE YOURSELVES!" - Elon Musk Says This Is Coming!

Because the cost of lithium, a key component in battery manufacturing, has gotten so high, Elon Musk tweeted that Tesla may get into the mining and refining business directly and at scale.

"Lithium prices have reached insane levels," Elon Musk wrote on Twitter. "Lithium is almost everywhere on Earth, so there is no shortage of the element itself, but extraction and refinement are slow." Let’s know more!

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Tesla is getting into the lithium business, because the costs are 'insane.'

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The Tesla and SpaceX CEO was responding to a tweet that showed the average price of lithium per tonne over the last two decades, with prices skyrocketing since 2021. The price of the metal has increased by more than 480 percent in the last year, according to Benchmark Mineral Intelligence.

According to the United States Geological Survey, a division of the United States Department of Interior, lithium deposits can be found all over the country. Lithium is the lightest metal and the least dense solid element, making it ideal for electric vehicle batteries. That means lithium batteries have a high power-to-weight ratio, which is important in the transportation industry.

This isn't the first time Elon Musk has mentioned the possibility of Tesla producing its own lithium. According to Fortune, which cited "people familiar with the matter," Tesla secured its own rights to mine lithium in Nevada in 2020 after a deal to buy a lithium mining company fell through.

The automaker had talks with Cypress Development Corp. in recent months about extracting lithium from clay deposits in southwest Nevada, but the parties didn't reach an agreement, according to the people, who asked not to be identified because the information isn't public. The electric vehicle manufacturer, which has pledged to cut battery costs by half, has instead focused on Chief Executive Officer Elon Musk's plan to dig for lithium on its own in the state, which he announced last week.

Lithium extraction from clay has proven difficult and expensive so far. Using this method, no company has been able to produce commercial quantities. Elon Musk's plan to cut battery costs and deliver on a promise to bring a $25,000 electric car to market, however, includes a push into mining. Last week, Elon Musk told investors that Tesla had secured 10,000 acres of lithium-rich clay deposits in Nevada and planned to extract the metal using a new, "very sustainable" method.

Tesla did not respond to requests for comment via email. Cypress has remained tight-lipped about any discussions with the automaker.
As demand for electric vehicles grows, the carmaker's decision to make its own battery cells and enter production of battery cathodes and related raw materials is intended to add in-house capacity alongside deals with external suppliers. Piedmont Lithium Ltd., which has a project in North Carolina, signed a five-year raw materials agreement with the company this month.

Piedmont Energy claims to have signed a five-year lithium supply agreement with Tesla.

According to BloombergNEF analyst Sharon Mustri, obtaining lithium from clay deposits has traditionally been considered too difficult and expensive due to low recovery rates. By 2030, BNEF estimates that about 5% of global lithium supply will come from unconventional resources, mostly clay.