Invest in lithium refining for a ‘license to print money,’ says Elon Musk

Elon Musk had a special message for those involved in Tesla’s Q2 earnings call last month, noting a global need for lithium and other battery materials. While lithium mining is something many companies can do, and a necessary part of the electric vehicle industry’s growth, Musk says lithium refining is tougher — which makes it a perfect market in which to make some money. 

Musk encouraged entrepreneurs to take up lithium refining during Tesla’s second-quarter earnings call last month, amidst a burgeoning EV market and higher-than-ever battery demand, according to Bloomberg. The news comes amidst skyrocketing lithium prices, which comes from a bottleneck created by the few global companies able to create battery-grade lithium carbonate and hydroxide chemicals.

Discussing the value in lithium refining, Musk noted that there are “software-like margins to be made in lithium processing,” adding that the practice is “basically minting money.”

“I’d like to once again urge entrepreneurs to enter the lithium refining business. The mining is relatively easy, the refining is much harder,” said Musk on the earnings call. “You can’t lose, it’s a license to print money.”

In China, which represents the world’s largest auto market and a key region for Tesla, lithium carbonate prices have soared by around 450 percent in the last year. Additionally, China has over half of the world’s lithium refining capacity at the current time, though other countries such as Chile, Australia and Argentina have started adding their own refining operations.

Tesla applied for a permit to start building a cathode facility for EV batteries earlier this year, and Musk has even talked about the automaker refining its own lithium if prices remain as high as they are. However, even if Tesla starts processing lithium by itself, it’s still likely to need a handful of other suppliers — especially until the global lithium refining industry grows.

Above: Lithium miners set for boom as car market goes electric. Video: Reuters / YouTube

Despite the business opportunities within lithium refining, Musk still cautions entrepreneurs from mistaking the wide-open market for an easy one to break into. This difficulty is likely the reason it’s so uncommon in the industry already.

Musk says lithium refining is “quite difficult and requires a massive amount of machinery and it’s a hard thing to scale.”

But like many of Tesla’s accomplishments, Musk’s statements are following in the footsteps that the automaker is already familiar with — if there’s no path in front of you, make one on your own.

“If our suppliers don’t solve these problems, then we will.”

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