Tesla (TSLA) is looking at the prospect of building a lithium processing facility in Texas as the company seeks to take more control of key production components amid rising prices. Tesla shares were up on the news.




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In documents filed with the Texas Comptroller’s Office, Elon Musk’s electric vehicle giant is evaluating a facility — which would refine lithium hydroxide — on the Texas Gulf Coast. Reuters first reported the filing of the documents.

Tesla said the facility will develop “lithium hydroxide for batteries” and process “raw ore materials into a usable state for battery production,” according to company filings. The company added in its letter to the Texas Comptroller’s Office that the plant would be the first of its kind in North America.

If the project is approved, Tesla says it could begin construction by the fourth quarter, with commercial production starting by the end of 2024.

Tesla added that it was simply “evaluating the feasibility of this project” and that “only very preliminary development activities have begun,” the filing said.

Who controls lithium?

The price of lithium has jumped about 120% in 2022, according to Benchmark Mineral Intelligence. Some analysts estimate that these increased prices could add about $1,000 to the cost of a new vehicle.

Most of the globe’s lithium is found in an area of ​​South America known as the “Lithium Triangle”. This region consists of Chile, Bolivia and Argentina. Approximately 58% of the world’s lithium resources are located in these three countries, according to the US Geological Survey’s 2021 Mineral Commodity Summary.

China currently controls the world’s lithium refining capacity, accounting for about 75% of global production in 2021, according to the Internal Energy Agency.

As Tesla wants to build its own refinery in North America, it could challenge China’s dominance. Meanwhile, it can also benefit from billions of dollars in EV incentives in the recently signed Inflation Reduction Act.

There are criteria EVs must meet to qualify for tax credits. By 2024, electric vehicle batteries must have at least 40% of minerals extracted or processed domestically. The other option is a country that has a free trade deal with the US that will grow to 80% in 2027.

If Musk goes ahead with the plan, lithium refining would begin by 2024. In Tesla’s second-quarter earnings call in late July, Musk hinted to investors that the company may enter the lithium business.

“I would really like to once again encourage entrepreneurs to enter the lithium refining business. You can’t lose. It’s a license to print money,” Musk said.

Tesla stock

Tesla shares rose about 1.5% in premarket trading on Friday. Shares rose nearly 2% to 289.26 on Thursday market tradeand now they are rising towards their 200-day moving average.

CNBC reported Thursday evening that there has been a change in leadership at Tesla’s Gigafactory, its large battery manufacturing plant in Nevada. Chris Lister, Gigafactory’s former vice president of operations, has left Tesla. Hrushikesh Sagar has been promoted to oversee the Gigafactory, according to CNBC.

Sagar reports directly to Musk and will oversee Tesla’s car assembly plant in Fremont, California, along with the Gigafactory.

Meanwhile, local press reports in Germany indicate that the country’s federal road transport authority has found “anomalies” during its investigation into the Tesla car’s Autopilot capabilities.

German regulators have been investigating Tesla’s automatic lane change feature since the beginning of the year. There are concerns that the device may be illegal in Europe.

Please follow Kit Norton on Twitter @KitNorton for more coverage.

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