What happened
Shares of Tesla (TSLA -1.45%) rose 3.6% on Friday following reports that the electric vehicle (EV) maker is considering making a big move into the lithium industry.
The tech-heavy NASDAQ was up by 2.1% for the day.
So what
Elon Musk has repeatedly urged entrepreneurs to get into the lithium refining business as the price of the metal has surged. "You can't lose," Musk said during Tesla's second-quarter earnings call. "It's a license to print money."
Now, it appears that Musk may take his own advice. Tesla could soon begin construction of a lithium hydroxide refining facility in the U.S., according to a letter to the Texas Comptroller's Office. The plant would process raw lithium into the form that's used to produce EV batteries.
Tax incentives would be required for the project to proceed in Texas, Tesla said. The company also noted that its plans were in the preliminary stages. Yet if approved, construction could begin as soon as the fourth quarter, with commercial operations starting in late 2024.
Now what
Prices for lithium, which is also used in batteries for mobile devices, have soared in recent years. Musk telegraphed Tesla's plans to offset the rising prices of the commodity in April.
Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale, unless costs improve.
-- Elon Musk (@elonmusk) April 8, 2022
There is no shortage of the element itself, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow.
Refining lithium could strengthen Tesla's supply chain and reduce its dependency on refiners in China, which have struggled with coronavirus-related disruptions. The move would also come at a time when the U.S. government is encouraging businesses to expand their domestic manufacturing networks.
