The EV maker is considering the construction of a lithium hydroxide refining facility in Texas.

Tesla is exploring the construction of a lithium refinery in Texas, subject to relief on local property taxes, the company has said.  In an application filed with the Texas Comptroller's Office, the automotive giant outlined plans to build a battery-grade lithium hydroxide refining facility to process raw ore material into a “…usable state for battery production”.  Subject to approvals, construction could start as early as Q4 2022 with commercial production planned for Q4 2024.  The final product would be trucked to Tesla’s North American battery manufacturing sites. 

Tesla has explored the idea of US lithium production in the past.  In 2014, the company offered US$325M for Simbol Materials, which was extracting lithium at a small scale close to San Diego, but the deal fell through.  And in 2020, it was reported that the company was going to build out lithium hydroxide capacity close to Gigafactory Texas. 

The move signals a further trend towards vertical integration for EV makers - vitally important given the high cost of battery raw materials and increasingly limited options to secure material. Last month, it was announced that BYD plans to invest in a lithium project in Jiangxi province to produce 100ktpy of battery-grade lithium carbonate.  But to further reduce supply risk and capture more value, the likes of BYD and Tesla also need to secure upstream lithium resources.  In early June, reports suggested that BYD intends to buy six lithium mines in Africa.  While Tesla announced that it had secured a 10,000-acre lithium claim deposit in Nevada in 2020, so far it remains unclear if and when it will have the appetite to produce its own lithium feedstock.