Electric cars keep getting more expensive, and this year we’re seeing an increase almost every 2 months. One of the main culprits is the increasingly expensive lithium, which has increased by 120% this year alone, increasing the price by $1,000 per car. Tesla wants to solve this problem alone.
Most lithium deposits are found in South America – Chile, Bolivia and Argentina have about 85% of the world’s lithium reserves. There are small deposits in North America and Canada, but they will not solve the problem of domestic demand, although it may take some pressure from supply chains. The big problem, however, is that China controls the refinery by recycling as much as 75% of the crude lithium from international supplies domestically. Americans are trying to reduce dependence on China in many ways, and lithium will be one of them.
Tesla is considering building its own lithium refinery, which will solve the problem of rising prices and reduce dependence on China, which actually controls this market.
If Tesla starts refining lithium in its home country, it will be able to take advantage of the huge government incentives brought about by the EV tax break. There are $30 billion in tax credits available to accelerate the production of electric vehicle batteries, as well as a $10 billion tax credit for increasing electric vehicle production. In addition to industrial tax credits, $2 billion in grants and $20 billion in loans are available to build new electric vehicle and battery factories. More tax breaks and grants are available to states and territories that are committed to clean technology.
There seems to have never been a better time to join the lithium mining and refining industry. If Elon Musk, who has been saying for a long time that lithium is an easy fortune-teller, decides to take this step, shareholders will be happy.