Insane lithium prices pushes Tesla boss to look into mining Metal Tech News - April 11, 2022
Tesla CEO Elon Musk has thus far focused the automaker's efforts on manufacturing electric vehicles and the lithium-ion batteries that power them. This could change as a shortage of the minerals and metals critical to lithium batteries threatens to slow production and drive up the costs of EVs.
"Price of lithium has gone to insane levels!" Musk tweeted on April 8. "Tesla might actually have to get into the mining & refining directly at scale, unless costs improve."
In a little over 15 months, the price for a metric ton of battery-grade lithium has rocketed more than 1,000%, from around US$7,000 at the onset of 2021 to current levels of around US$78,000.
And lithium is not the only battery material to experience major prices spikes in this nascent stage of the EV revolution.
Benchmark Minerals Intelligence, considered the foremost authority on lithium battery supply chains, says the price of nickel has jumped 250%, cobalt and manganese have doubled, and graphite is up more than 25% since January 2020.
The escalating price of these basic inputs into the lithium battery supply chain is a concern for Tesla and other automakers attempting to lower the costs of manufacturing EV batteries to a point where the price tag on electric cars and trucks is on par with comparable internal combustion engine vehicles. It is the supply and demand imbalance that these price surges indicate, however, that is a larger worry for Musk.
"There is no shortage of the elements, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow," he tweeted.
The tweet came on the same day as the "Cyber Rodeo" grand opening of Gigafactory Texas, an automotive plant near Austin that will also house an enormous battery factory that will need massive quantities of lithium and other battery materials.
Unfortunately, even if Musk decides to expand Tesla into the mining business today, it will l take time to permit and develop a gigamine, and time is another commodity that is in short supply for EV automakers.
Benchmark has long been warning of lithium battery material shortfalls and price spikes if the automotive original equipment manufacturers, governments, and financial institutions did not invest early into the mines that feed minerals and metals into the EV supply chains.
The United Kingdom-based battery supply chain analyst has watched global lithium battery production surge from 59 gigawatt-hours in 2015 to 400 GWh in 2021 – and is forecasting a 50% leap to 600 GWh this year.
With at least 285 battery gigafactories in various stages of planning and construction, Benchmark foresees even sharper battery production rises on the horizon, as long as the mining sector can feed enough minerals and metals into the lithium-ion battery supply chains.
This, however, is a tall order for an industry that moves on geological timescales in comparison to the lightspeed expansion of the downstream EV sector.
Benchmark Mineral Intelligence CEO Simon Moores and Morgan Bazilian, director of the Payne Institute and professor of public policy at the Colorado School of Mines, believe that automakers will need to directly support mining with their financial wherewithal and political clout in order to feed the battery factories powering their EV ambitions.
"Big talk on EVs must now mean equally as big statements on mining," the battery minerals and policy experts penned in an April 8 editorial directed at automakers. "After all, a gigafactory without secure raw materials is as useful to an OEM (original equipment manufacturer) as a grain silo."
Musk has long realized that Tesla may be required to get into the mining business.
"We might get into the mining business. I don't know," the EV pioneer said in 2019. "We'll do whatever we have to ensure that we can scale at the fastest rate possible."
So far, however, the electric automaker has only been indirectly linked to mining through offtake agreements and other partnerships aimed at securing battery materials from companies that are and hope to be producing them.
General Motors, Volkswagen, BMW, and other automakers have also entered into deals to secure cobalt, graphite, lithium, and nickel from mining companies but have been hesitant to roll up their sleeves and directly dig up these minerals and metals themselves.
While understanding this reluctance, Moores and Bazilian advise automakers that "to have the ultimate sway of industrial power you need to own the mines, in part or in full."
Musk's April 8 tweet suggests the EV trailblazer agrees. However, we will have to wait and see if Tesla is ready to develop gigamines and gigarefineries at the front end of the electric automaker's global supply chains.