Tesla buying Lithium assets

Tesla (TSLA) stock has been a roller coaster recently. The electric car manufacturer is frequently making the news with their innovative self driving cars and popular CEO. You cant get electric cars without batteries, and lithium is a key component to building them. Is Tesla now a Lithium stock? Well not quite, but they do have some exposure to the battery metal having recently acquired Lithium assets.

This vertically integrated move means Tesla now own 10,000 acres in Nevada and is officially entering the mining game. Although the company has only recently started making a profit, the market appears to have high hopes for this incumbent in the automobile sector. Their stated rationale for pursuing this is that they intend to use this for a new Lithium extraction process which they will pioneer.

Drew Baglino, SVP of engineering at Tesla, said:

“We are going to use a new process that we will pioneer. It’s a sulfate-free process again, we skip the intermediate. It will result in a 33% reduction in lithium cost.”

They didn’t go into too many details about that process.

CEO Elon Musk added:

“What is the best way to take the ore and extract the lithium and do so in an environmentally-friendly way? We have been looking at from a first principle physic standpoint instead of just the way it has always been done. We found that we can actually use table salt, sodium chloride, to basically extract the lithium from the ore. Nobody has done this before to the best of my knowledge.

Model X

Mining in general has environmental impacts that can be negative. Lithium is certainly no exception to this. The speculation around the so-called “electric car boom” has made it’s contribution to pollution with the increase in demand for Lithium. This is what makes this acquisition all the more exciting, as the possibility of Elon Musk pioneering a new extraction process would be a massive game changer for the industry. Very exciting stuff by the electric car innovator and for Lithium mining all-around.

This is not the only vertical integration that has transpired, with CLF recently acquiring MT. With a number of lithium miners listed on the TSXV, this is a ripe opportunity to invest in lithium explorers.

We are on the lookout for high quality lithium mining companies on the TSXV, and hope to have a recommendation shortly. Stay tuned…