Tesla’s Most Important Project for the Next Two Years Is Not a Vehicle

On Monday, Elon Musk's EV company broke ground on a Texas facility that will make them unique among American automakers

Tesla CEO Elon Musk at the F1 Grand Prix of Miami at Miami International Autodrome on May 6, 2023
After watching F1 in Miami this weekend, Elon Musk broke ground at a new Tesla facility on Monday.
Clive Mason - Formula 1 via Getty

As Tesla stock prices swung into the stratosphere during the pandemic, experts explained the unprecedented valuation by noting the EV builder was really a tech company, not a traditional automaker. The thing about tech companies, though, is that like normal manufacturers, they should be in the business of releasing new products and services (see: Apple’s annual iPhone upgrades, the race to release AI tools, etc.). And Tesla has been criticized for not following through on its new products, specifically the long-delayed Cybertruck and the long-rumored $25,000 entry-level car

But the thing is, Tesla doesn’t have to release new EVs, because no one has been able to even come close to matching their sales in the U.S. In 2022, the best-selling EV was the Tesla Model Y at around 190,000 units, the second was the company’s Model 3 at around 156,000. In third place? The Ford Mustang Mach-E with just over 28,000 electric crossovers sold. It’s not close, and it doesn’t look like anyone will be able to challenge Tesla in the short term.

However, Tesla is now working in earnest on a new project that will be even more consequential than another electric car in their lineup, and it shows just how far ahead the EV maker is from the rest of its American competition.

On Monday, Tesla broke ground on a lithium refinery in Texas, a plant that is expected to finish construction sometime in 2024 and then produce at full capacity in 2025. While other automakers have deals with refineries to acquire this necessary metal needed for EV batteries, Tesla is now unique among American car companies in owning the process itself; according to Reuters, if the refinery reaches its expected capacity of producing enough lithium to build one million EVs by 2025, it would be “the largest North American processor of the material.” Period.

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“The facility will push Tesla outside its core focus of building automobiles and into the complex area of lithium refining and processing, a step Musk said was necessary if the auto giant was to meet its ambitious EV sales targets,” Reuters explained. Currently, American automakers must largely rely on other countries, like China, for mining and refining these critical minerals needed for batteries.

Tesla has been thinking about getting into lithium production itself, rather than exclusively relying on other entities, for a long time. Back in 2020, Musk discussed plans to mine the material in the U.S. during a Tesla Battery Day event. While that has not come to fruition, taking over this second step in the lithium production process could put them at an even greater competitive advantage than they already are over other automakers in the EV sector.

We’ve got a long way to go before this refinery is up and running, and before it has an impact on Tesla’s business. But not too long. There’s a high probability they’ll be churning out usable lithium from this facility before the Cybertruck or sub-$25,000 EVs are being delivered to customers, and that’s just fine. Americans seem to be happy with the options they have right now, and Tesla is making certain they’ll be able to keep building them. 

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