Tesla Shares Soar as Strategic Lithium Refining Boosts Market Confidence
1min read Tesla's (TSLA) shares continue to rise, witnessing a surge of 3.64% on December 17th and marking a three-day gain of 14.77%, reaching the highest intraday price since August 2022. Mizuho Securities recently upgraded Tesla's stock rating from "neutral" to "outperform" and set a new target price at $515. Analyst Vijay Rakesh highlighted the easing of the autonomous driving regulatory framework, which presents upward valuation potential for Tesla's FSD and Robotaxi ventures. The revised policies under the Trump administration are anticipated to place Tesla in a favorable position due to its competitive cost structure.
This robust market performance coincides with noteworthy strategic developments for Tesla. The automaker has commenced operations at its large lithium refinery in Texas, making it the only North American automaker to self-refine lithium. This initiative is expected to accelerate Tesla's mission towards sustainable energy and boost North American battery-grade lithium supply. The refinery, located in Robstown, Texas, is projected to produce approximately 50GWh of battery-grade lithium annually upon full operational status. This move aligns with CEO Elon Musk’s consistent enthusiasm for investing in lithium mining, viewing it as a lucrative opportunity akin to “a license to print money.”
Tesla's foray into lithium refining is part of a strategic move to establish a full-scale cost and quality control system for its batteries. The approach leverages Tesla’s proprietary technologies such as cation exchange and advanced grinding methods, maximizing the efficiency of lithium extraction. Historically, Tesla’s engagement in this domain can be traced back to 2018, reinforcing its long-term commitment to sourcing key materials internally.
The rationale behind this strategy not only involves cost-saving measures but also securing lithium supply, consequently enhancing Tesla’s supply chain control. The internal production capabilities aim to reduce external dependency and strengthen vertical integration. With the anticipated surge in lithium battery retirements, this initiative could spearhead efficient recycling processes, promoting a sustainable cycle of battery usage.
A significant factor encouraging Tesla's refinery development was the Inflation Reduction Act of 2022, which stipulated that to qualify for full tax credits, electric vehicles manufactured in the United States must use core materials sourced domestically. As the leading U.S. electric vehicle manufacturer, Tesla's advancement into lithium refining preemptively aligns with these requirements.
