Whether prospectors will strike it rich, however, remains very much in doubt.

Two developments Wednesday amplified the growing appetite in the U.S. for lithium, a core element used in electric vehicle batteries that’s in short domestic supply.

Tesla CEO Elon Musk confirmed during an earnings call that his company plans to build a lithium refinery in the Texas Gulf Coast town of Corpus Christi, aiming to gain greater control over the battery production supply chain. The proposed $375 million facility would process raw materials into battery-grade lithium hydroxide for use in electric vehicle batteries, the core product in Tesla’s cars.

Federal officials also awarded $2.8 billion in grants from a bipartisan infrastructure law to 21 companies integral to the domestic battery supply chain. The beneficiaries include several firms that mine, refine, and use lithium for high-tech batteries. 

Both announcements reflect unease within the auto industry and the halls of Washington about the current state of domestic lithium production. As it stands, the U.S. is responsible for about 3% of the world’s lithium refining, a fraction of China’s roughly 60% global market share, according to Benchmark Mineral Intelligence. (Australia, Argentina, and Chile mine most of the world’s lithium.)

Musk and federal officials are banking on lithium as a primary element in high-capacity electric vehicle batteries and, in turn, efforts to combat climate change. 

Musk aims to sell 20 million Tesla EVs annually by 2030 (it’s on track to produce about 1.4 million this year), while Biden wants half of all vehicles sold to produce zero carbon emissions by the end of the decade. Federal lawmakers also passed legislation this summer tying future EV tax credits to strict domestic battery production requirements.

Still, even with the newfound urgency and billions of dollars in production investment, much would need to go right for Tesla and the feds to hit the lithium mother lode.

While lithium demand will certainly increase at a rapid rate over the next decade, industry analysts hold wildly divergent views on the future of lithium supply. Some pundits believe existing producers in U.S.-allied countries can adequately scale up lithium mining to meet demand—with new market entrants merely creating a supply glut. Others forecast a sizable lithium shortage, which would stunt EV production and drive up the cost of electric cars.

“In a survey of six leading lithium forecasters, estimates for how the market will look in 2025 range from a deficit equal to 13% of demand to a 17% surplus,” Bloomberg reported in February. “Projections for the market’s size diverge sharply too, with demand forecasts ranging from as little as 502,000 tons to as much as 1.3 million tons.”

In addition, the lengthy process of establishing lithium mines and refining facilities could prove onerous. 

New mines can take several years to produce any lithium, a timeline exacerbated in the U.S. by extensive environmental and permitting requirements. Tesla, meanwhile, told Texas officials in August that the company’s proposed refinery wouldn’t start commercial operations until the fourth quarter of 2024. In the meantime, new mineral technologies or shifting demand could make some of those investments outdated.

Adding to the too-little, too-late concerns: the new domestic EV tax credit policies.

By linking consumer tax credits of $7,500 per EV to domestic battery production mandates, federal lawmakers and the Biden administration hope to turbocharge investment in the U.S. and wean automakers off Chinese suppliers within the next few years. However, many auto industry executives argue that the battery mineral and component sourcing requirements are unattainable—diminishing the incentive to employ higher-priced, less-experienced U.S. lithium firms.

“I don’t think that you can transform the mineral production and extraction within the next two to three years,” Volkswagen Americas chief executive Pablo Di Si said Wednesday at the Reuters Events auto conference. (As I wrote in August, federal bureaucrats could tinker with the mandate timelines.)

Musk and federal officials are taking a calculated risk in lithium remaining scarce and sorely needed. Their bet could still pay off—though finding success will require navigating quite a minefield.

Want to send thoughts or suggestions to Data Sheet? Drop me a line here.

Jacob Carpenter

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NEWSWORTHY

A rare down quarter. Tesla shares slid 6% in midday trading Thursday after the electric-auto maker missed analysts’ third-quarter revenue estimates and warned that total deliveries in 2022 likely would fall short of internal targets, CNBC reported. Tesla posted earnings of $1.05 per share, topping Wall Street’s forecast by six cents, but revenues of $21.45 billion didn’t meet analyst expectations of $21.96 billion. CEO Elon Musk said demand for Tesla vehicles remains strong, but logistics and supply-chain challenges contributed to the shortfall in its results.

He keeps messing with tech. Texas Attorney General Ken Paxton sued Google on Thursday, alleging that the Alphabet unit broke the state’s privacy laws by collecting users’ face and voice data, the Wall Street Journal reported. In his lawsuit, Paxton alleges that Google used its Photos and Assistant features, as well as its Nest smart-home products, to harness user data without seeking the legally needed consent. The lawsuit marks the latest attack on Big Tech by Paxton, who is also suing Google on advertising antitrust grounds and Meta on charges of violating data privacy laws.

Rolling with the times. IBM shares ticked up 4% in midday trading Thursday after the tech conglomerate beat analysts’ third-quarter projections and issued an improved full-year forecast, MarketWatch reported. Company officials said hybrid cloud and consulting services powered a strong quarter, as businesses tapped IBM technology to navigate volatile economic conditions. CEO Arvind Krishna said full-year revenue growth is now expected to top the high end of earlier projections, which were in the mid–single digits.

Flight of fancy. SpaceX unveiled plans Wednesday to offer Starlink satellite internet on private jets starting next year, the company’s latest expansion of its wireless internet products, Reuters reported. Jet-setters will need to fork over $150,000 for one-time hardware costs and $12,500 to $25,000 per month for the service. SpaceX has deals in place to provide airborne internet on JSX and Hawaiian Airlines planes, though it has yet to secure any business from the world’s largest airlines.

FOOD FOR THOUGHT

A case of digital discrimination. Your neighbor might have faster internet than you despite paying the same price—especially if you live in a lower-income neighborhood. A new investigation by The Markup found AT&T, Verizon, Earthlink, and CenturyLink routinely offer different base speeds to customers at the same price, with wealthier and predominantly white neighborhoods getting the better end of the bargain. In the most extreme example, CenturyLink charged as little as $0.25 per megabit per second, while other customers in the same city paid $100 per megabit per second. Telecommunications providers didn’t dispute the findings, though some argued that the analysis overlooked federal subsidies for at-home internet and didn’t account for differences in broadband infrastructure across neighborhoods.

From the article:

Residents of neighborhoods offered the worst deals aren’t just being ripped off; they’re denied the ability to participate in remote learning, well-paying remote jobs, and even family connection and recreation—ubiquitous elements of modern life.

“It isn’t just about the provision of a better service. It’s about access to the tools people need to fully participate in our democratic system,” said Chad Marlow, senior policy counsel at the ACLU. “That is a far bigger deal and that’s what really worries me about what you’re finding.”

IN CASE YOU MISSED IT

With Tesla stock set to fall, Elon Musk made his boldest prediction to date, by Christiaan Hetzner

VC investing is at a two-year low—but there are a few bright spots, by Jessica Mathews

Parler managed to accidentally expose most of its elite members’ private email information in message announcing Kanye West takeover, by Alice Hearing

Silk Road sleuths launch Naxo, a firm dedicated to the cutting edge of crypto tracking, by Jeff John Roberts

The CFOs at a 160-year-old retailer and an emerging technology company talk about their approaches to modern KPIs, by Sheryl Estrada

The crypto dream is not dead. We hope the delusions are, by Danny Rimer

BEFORE YOU GO

May the force be with him. Star Wars thespian Mark Hamill is getting involved in the real wars. Bloomberg reported Wednesday that Hamill, best known for portraying Luke Skywalker, has become an unexpected ambassador for the Ukrainian army, helping it raise money for drones used to combat the monthslong Russian onslaught. The 71-year-old actor’s advocacy started last month following a call with Ukrainian President Volodymyr Zelensky, who asked for help from the Star Wars icon. Hamill said his “Army of Drones” campaign has already raised enough money for more than 500 drones that will “define war outcomes.”

Editor’s note: This article has been updated to correct IBM’s projection for full-year revenue growth.