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Tesla considers building a lithium refinery in Texas

Yahoo Finance's Pras Subramanian discusses Tesla's proposal to enter the lithium mining industry.

Video Transcript

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AKIKO FUJITA: Tesla may be getting into the lithium refining business. The electric vehicle giant is proposing a new facility in Texas to produce a critical element in EV production. Let's bring in Yahoo Finance's Pras Subramanian with the story. Pras, we have seen lithium prices soar this year. And Elon Musk, earlier this year, kind of hinted at getting into this when he tweeted on the back of it, saying maybe Tesla needs to get into lithium because prices are so high.

PRAS SUBRAMANIAN: Yeah, you know, on an earnings call-- I think it was Q1-- he said something to the effect of do you like minting money? Then the lithium business is for you. Right? So he's clearly on top of that and clearly knows what's going on, in terms of Tesla's own needs for these critical resources they need for batteries.

So we saw them file an application with the Texas Comptroller to potentially build a lithium refinery on the gulf coast, there in Texas. They would-- they want to actually see if they can get some tax credits before they actually approve this refinery. So they'd process this raw material for their batteries. And they said that, if approved, they would start building this refinery in Q4, but production wouldn't begin until the end of 2024.

And Akiko, it would be-- this would be, actually, the first car-- automaker that would actually be building a refinery-- lithium refinery. A bunch of automakers have invested in raw materials and raw lithium with other companies. But this is the first time an actual company would actually make their own lithium. And they said that they would use this lithium and ship it out to their factories in Texas, and also Nevada, to make their powertrains.

AKIKO FUJITA: We've also got some leadership changes at the top of the Tesla Nevada gigafactory surrounding VP of operations, Chris Lister. What can you tell us about these moves? And what does this say about their ambitions there?

PRAS SUBRAMANIAN: You know, late last night, we saw CNBC reported that-- they had an audio recording from a meeting just yesterday at Giga, Nevada, where they changed out Chris Lister and Hrushi Sagar, who was a lieutenant that Musk had had for a long time. He had to run operations both at Nevada and Fremont.

But a lot of the stuff that I saw that was very interesting was the data that they revealed about their operations. I think in Nevada has now produced 283,000 drivetrains in Q2. That's a lot. That's the power-- that's the battery and also the motor powertrains that they're going to go. I think they're going to both feed the Fremont factory and Austin operations.

Also, the Fremont was up to 12,000 cars a week, and they want to ramp up to 14,000 cars a week. And that's around 500,000 to 600,000 EVs a year, give or take time periods of stoppages for upgrades and things like this. That's a lot of production out of just Fremont, alone. Let alone, you have Austin kind of ramping up, too.

So they also noted that megapacks-- those are these big, huge powerwall-type installation that they're using. They're like massive, trailer-size units. They're about 42 a week. And then also, they have about 6,500 powerwalls. So they're really upgrading-- up-- upping their games of production at Gigafactory, Nevada, including the statute, as well.

AKIKO FUJITA: A lot of changes in store for Tesla. Pras Subramanian, thanks so much for that.