Shares of Lithium Americas (LAC -0.28%) plunged today and traded as much as 12.5% lower by 1 p.m. ET on Thursday.
Lithium prices eased off highs after China reported a 41% sequential jump in lithium carbonate production for the month of March. That, however, isn't the real reason Lithium Americas stock tanked today. Tesla (TSLA 4.06%) is.
Tesla reported stellar numbers for its first quarter, with its deliveries surging 68% year over year. That reflects how strong demand is for electric vehicles (EVs), and that's great news for lithium mining companies as they supply a key raw material for EV batteries
The good news, though, ends there.
For quite some time now, Tesla CEO Elon Musk has toyed with the idea of integrating vertically by venturing into lithium mining. The idea came up yet again at Tesla's earnings conference call, held on Wednesday after market close.
In response to an analyst's question about Tesla's plans to secure raw materials to manufacture EVs at scale, Musk stated Tesla will take action on what it believes are the "most limiting factors" to a sustainable energy future. He singled out lithium mining and refining as one such limiting factor, emphasizing how lithium is the single biggest item adding to costs right now.
Musk said Tesla is looking at raw materials like lithium as well as nickel and iron phosphate that go into lithium-ion battery cells and trying to figure out ways to "accelerate the total amount of raw materials needed to transition the world to sustainability."
And Musk said he'll have "some exciting announcements" to make on this front in the coming months.
What's been speculation until now could soon be reality, going by Musk's latest words. Whether and when Tesla gets into lithium mining or refining and processing is anyone's guess. But should it do so, Tesla will become a threat to existing lithium miners, especially ones like Lithium Americas that are only just getting started.