Tesla’s Lithium Checkmate
Tesla's lithium checkmate likely destroys the competition. I explore how everyone should be looking at this move by the EV giant.
<i> Image Credit: tesla.com </i>
Are traditional mining companies and legacy automotive companies in deep trouble? Recent developments by Tesla could mean a change in thinking in how Lithium is refined and ultimately how it is sourced. I thought of this when I saw Tesla’s groundbreaking ceremony of a lithium refinery plant in Corpus Christi, Texas. It is an interesting move in the global EV space as well as the global lithium supply chain as a whole.
As some who follow Tesla may have noticed, the refinery marks another step towards a sustainable energy future in what Elon Musk proposes to be his or Tesla’s Master Plan Part 3. It is a masterstroke in vertical integration that only Henry Ford’s could rival. Tesla is cutting the supplier of refined lithium and the middleman, and I don’t want to be graphic, but they are cutting them just below the chin. If the process they describe in this video of the groundbreaking ceremony is what they will achieve, it is a checkmate for this awakening giant.
Elon musk, in the video linked, speaks of how the supply of refined lithium with the purity required for battery production is scarce. This means many countries and companies who are banking on lithium ore deposits and mines may be headed for disaster if they do not increase their focus on refining capabilities and technologies.
If Tesla proves its novell refining techniques and innovative methods, then the dinosaurs that have been roaming the mining and refining space are in for a storm of meteors. Tesla’s agility and their relationship with the Texas government enable it to leverage its position to expand the refining from 1 million vehicle’s supply to multiples of that.
Putting aside the EVs, the implications of this refinery on the battery storage space is also potentially world changing. The shift to a sustainable global energy supply can be accelerated if new and old technologies can be leveraged to assist solar and wind plants around the world. This changes solar and wind to viable base load if they are coupled with large lithium ion batteries. There it is again, lithium. Tesla is also an early leader in this space, with its large stationary storage Powerpack products. The company is positioned to rule in EVs, lithium refining and energy systems, both solar and storage.
My view in this case of lithium, is that instead of ridiculing and dismissing the man, the myth, the legend that is Elon Musk, it is prudent for companies and countries to take note, consider and pivot so that their actual or perceived business assets, investments and plans do not become worthless while thinking their ore deposits and business models will net them great profits.It is time to plan with a view that your entire industry can be disrupted and destroyed before you realise it.
The whole thesis of disruption by Clayton Christensen is based on the incumbent ignoring a new entrant into a space because initially their product is inferior but within a relatively short time the new, cheaper product surpasses the incumbents in the market and without warning, they are disrupted. The internal combustion engine space is in this dilemma but that is a discussion for another day.
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