Elon Musk says Tesla may forge into a new industry: lithium mining

Ever the entrepreneur, Tesla CEO Elon Musk tweeted on Friday that his firm may get into the lithium mining and refining business directly because the cost of lithium, a crucial component in the manufacturing of electric vehicle batteries, has become "insane."

“Price of lithium has gone to insane levels,” Musk tweeted. “There is no shortage of the element itself, as lithium is almost everywhere on Earth, but the pace of extraction/refinement is slow.”

An increase of more than 480% in the last year

The message was written in response to a tweet showcasing the average price of lithium per tonne per year in the last twenty years. According to Benchmark Mineral Intelligence, lithium has gone up more than 480% in the last year alone.

Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale, unless costs improve.

There is no shortage of the element itself, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow.

— Elon Musk (@elonmusk) April 8, 2022

Elon Musk's idea is not entirely new. Researchers have been seeking for years to end our reliance on the hard-to-extract metal.

There have been developments of sodium-ion batteries that offer a tenfold boost in capacity and others that could speed up the request for more solar power. But thus far, nothing has been able to replace lithium-ion batteries.

This is not the first time Musk has considered the idea of Tesla mining its own lithium. In 2020, Fortune sited “people familiar with the matter" and revealed that Tesla acquired its own rights to mine lithium in Nevada after a deal to buy a lithium mining company called Cypress Development Corp. did not work out.

Price hikes

Tesla already had to increase its prices last month, with the Model 3, the firm's, cheapest car, now selling for over $46,000. “Tesla and SpaceX are seeing significant recent inflation pressure in raw materials and logistics,” tweeted Musk during that time.

The decision was made due to global chip shortages and the rise in commodity prices caused by the war in Ukraine.

The question now becomes whether developing his own lithium mining business will really help Musk or whether he will have to invest more than he gets out of it.