As the executives sat in model 3 and watched Elon Musks performance through a car screen, they saw the Tesla CEO throw a shock: Tesla is becoming their competitor.
Tesla has won access to a piece of land in Nevada, covering about 40 ordinary kilometers, plans to extract lithium in a simple way, and will build a lithium smelter to supply lithium to the new super factory in Texas, musk said. The next day, as shares of Albemarle and Livent plummeted, the market value lost a total of $1.7 billion.
However, industry insiders and observers still doubt whether Tesla, which makes cars, can pose a serious competitive threat to the established lithium battery manufacturers. Teslas plan is unlikely to bear fruit in years, they say, but is designed to put pressure on the five company LED industry to increase production.
Hes making a splash, says Simon Moore, managing director of benchmark mineral intelligence, a consultancy The message is, we dont believe you can meet our needs quickly, so well do it ourselves. This is a slight spur to upstream companies.
Tesla is seeking to cut battery costs by more than half to produce an electric car that costs only $25000 to compete with mid range fuel vehicles in the mass market.
Analysts at Citigroup say Tesla needs 3 terawatt hours of batteries to achieve its ambitious goal of producing 20 million vehicles a year by 2030, which means that the entire lithium battery industry needs to grow more than eight times to meet Teslas supply demand.
Wood Mackenzie, an energy consultancy, said $50 billion in lithium would be needed to meet battery demand over the next 15 years if the world was to meet the targets of the Paris climate agreement.
But in the face of three consecutive years of falling prices, lithium producers have been difficult to expand. According to benchmark mineral intelligence, the price of lithium hydroxide used by Tesla has fallen by 20% in the past year.
Without further investment, Tesla may face the risk of lithium supply shortage and potential price surge in the next 10 years.
In August, low prices prompted Albemarle to temporarily close its lithium plant in silver spring, Nevada. The company also slowed investment in a lithium hydroxide refinery in Western Australia.
To support supply, Tesla last month signed an agreement with Piedmont lithium, a North Carolina mining group, to buy the companys five-year lithium production from 2022.
Image: a technician processes mineral samples at a lithium plant.
Keith Phillips, chief executive of Piedmont lithium, said the contract would help Piedmont get funding to put more lithium into production.
One of the problems for Tesla is that outside of the Chinese market, Albemarle and live have monopolized the lithium hydroxide Market, he said. Neither company has increased upstream capacity, but Teslas demand is growing every year. If they can help others succeed, they can bring more lithium to the market, which is also good for them.
With Piemonte lithium and its Texas smelter, Tesla could reduce lithium production costs by 33%, musk said.
But thats only a fraction of Teslas needs, according to Joe Lowry, a senior adviser to the lithium industry.
He also questioned plans to extract lithium from clay deposits in Nevada. We take a piece of earth from the ground, take out lithium, and put it back in place, Musk concluded on battery day
I dont think Tesla can succeed in meeting its high demand for lithium, says Lori I think theyre going to struggle as hard as anyone else in the industry - its not easy to make high-quality lithium compounds, musk knows that. Is this just a trick to get lithium battery companies back to the table?
Kent masters, chief executive of albertmarle, said the company had considered extracting lithium from clay in Nevada. But the conclusion is that the companys production costs are not competitive compared to mining lithium in Chile and Australia.
Given the current prices, our price forecasts and the availability of other resources, (extracting lithium from clay) is not economical, he said in a recent conference call with analysts.
Another lithium executive said Tesla needed government permission to start mining in Nevada, and the process itself could take years.
Morse believes that the real purpose of the battery day statement is to start the process of establishing a lithium supply chain in the U.S. market. The U.S. market now produces almost no batteries, no chemicals or raw materials, making it difficult to have an integrated Tesla battery center, he added (Chen Chen)
Source: Wang Fengzhi, editor in charge of Netease science and Technology Report_ NT2541