Tesla Inc. chief executive officer Elon Musk has advised entrepreneurs to get into the lithium business as he seeks to expand the fast-growing industry that is crucial for products such as electric vehicles (EV).
"We think we’re going to need to help the industry on this front," Musk said on an earnings call on Wednesday. "I certainly encourage entrepreneurs out there who are looking for opportunities to get into the lithium business."
The world's most valuable carmaker explained that Tesla thinks the raw production of lithium's surging demand could become a limiting factor for worldwide EV adoption in the future, noting that Tesla is trying to address those issues.
Musk shared that mining and refining the metal is currently the "single biggest cost growth" for Tesla. He further clarified that the actual content of the mineral in a lithium-ion cell makes up 2 to 3 percent of the battery cell—or about 11 pounds for each car. The cell’s most expensive and heaviest item is the cathode, which is the nickel or iron phosphate part.
"So, we’re looking carefully at all of the raw materials and are trying to figure out how we can accelerate the total amount of raw materials needed to transition the world to sustainability," he said.
"We’re seeing cases where the spot lithium price is 10 times higher than the cost of extraction. So, we’re talking 90 percent margins here," Musk explained. "Do you like minting money? Well, the lithium business is for you," he said jokingly.
The demand for lithium was about 350,000 tons across the world in 2020, and is expected to be six times higher by 2030. Despite the presence of lithium reserves in various parts of the globe, the United States is home to just a single active lithium mine, in Nevada. New projects are coming up in California, Maine, and North Carolina. However, shortages are expected to last for decades.
Musk elaborated that there's no shortage of ore in the world to produce lithium, as it's present almost everywhere and is a very common element.
"However, you still need to dig up the ore, dig up basically the clay with the lithium and then you need to go through a whole series of refinement steps. And that’s a lot of industrial equipment that’s needed to refine lithium ore to lithium that can be used as lithium hydroxide or lithium carbonate in a battery cell," he explained.