Elon Musk noted the demand for lithium and other battery materials around the world in a special message for people who participated in Tesla’s Q2 earnings call last month. While many businesses can mine lithium, which is essential to the expansion of the electric vehicle industry, Musk claims that lithium refining is more difficult, which makes it the ideal market in which to make some money.
During Tesla’s second-quarter earnings call last month, Musk encouraged business owners to start up lithium refining due to the growing EV market and higher-than-ever battery demand, according to Bloomberg . The announcement coincides with lithium prices that are on the rise due to a bottleneck caused by the small number of worldwide businesses that can produce chemicals with lithium carbonate and hydroxide of battery-grade quality.
Musk said there are “software-like margins to be earned in lithium processing” when discussing the potential in lithium refining, adding that the activity is “essentially minting money.”
“I want to encourage business owners to go into the lithium refining industry once more. Mining is quite simple, but refining is far more difficult, according to Musk on the earnings call. You can print money with this license, therefore you can’t lose.
Prices for lithium carbonate have increased by over 450% in China, the largest auto market in the world and a crucial market for Tesla. Furthermore, China currently controls more than half of the world’s capacity for lithium refining, though Chile, Australia, and Argentina have started expanding their own refining capacities.
Tesla sought for a permission to begin construction of an EV battery cathode facility earlier this year, and Musk has even mentioned the possibility of the company refining its own lithium if costs stay this high. Even if Tesla begins processing lithium on its own, it will probably still require a few additional suppliers, especially until the global lithium refining sector expands.
As more cars become electric, lithium mining will prosper. Reuters/YouTube video
Despite the lucrative commercial potential in lithium refining, Musk nevertheless advises business owners to avoid thinking that the vast industry will be simple to enter into. It’s probably so rare in the industry already because of this difficulties.
Lithium refining, according to Musk, is “very challenging, necessitates a vast amount of technology, and it’s a hard thing to scale.”
Musk’s remarks, though, are following in a tradition that the manufacturer is already familiar with: if there isn’t a route in front of you, construct one on your own. This is true of many of Tesla’s successes.
“We will address these issues if our vendors don’t,”
EVANNEX was the original publisher. Author: Peter McGuthrie
Officials from Tesla doing risk analyses at a mining site are shown in the featured image. Picture provided by Tesla .
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