Tesla (TSLA) - Get Free Report has secured its own lithium mining rights in Nevada after dropping a plan to buy a company there, taking the electric vehicle maker a step closer to its plan of mass-producing less-expensive batteries and being master of its own battery supply chain.
Citing people familiar with the matter, Bloomberg reported that Tesla has secured its own rights to extract lithium - a key ingredient in long-life, high-performance batteries - after failing to reach a deal with Cypress Development Corp., which focuses on extracting lithium from clay deposits in southwestern Nevada.
The electric carmaker instead plans to dig for lithium on its own in the state. Lithium has been proven abundant in clay deposits in Nevada, though producing commercial quantities in a productive and cost-efficient manner has so far proven illusive.
Tesla’s CEO Elon Musk told investors at the company’s “Battery Day” event last week that Tesla has secured access to 10,000 acres of lithium-rich clay deposits in Nevada, and plans to use a new, “very sustainable way” of extracting the metal.
That followed pledges from the car and battery maker to produce a cheaper, lower-cost battery, build a $25,000 electric car and eventually produce 20 million vehicles a year.
Tesla’s decision to make its own battery cells, and to enter production of battery cathodes and associated raw materials, is intended to add in-house capacity alongside deals with external suppliers as demand for electric vehicles continues to rise.
Indeed, Tesla and other automakers are seeking greater involvement in their respective supply chains to ensure they’ll have access to raw materials like lithium in the right volumes - and in the most economical way possible.
Musk last week said Tesla was focusing on development of a yet-proven process to extract lithium using sodium chloride, or table salt, instead of more expensive chemical reagents - something that would make the process more efficient and less expensive.
Lithium raw materials are most commonly extracted at brine operations which pump liquid from underground reservoirs into vast evaporation ponds, or in traditional hard rock mines.
Tesla in June stuck at deal to buy cobalt, another key ingredient in batteries, from Baar, Switzerland-based Glencore, the world’s biggest cobalt miner.
Shares of Tesla were down 2.05% at $412.57 in trading on Tuesday.