PLS (ASX) Thoughts on this comment by Elon Musk on Lithium supply?

Originally posted by Luketh ↑

I was watching the Tesla Shareholders Meeting, and noticed a good question about Lithium. Both Elon and JB Straubel (CTO of Tesla) had interesting replies...

I have paraphrased their answers, but this is the gist (note: found at 2:58:55 athttps://www.teslamotors.com/2016shareholdermeeting)

Question asked:
Is there enough Lithium supply in the world for you to build everything you want to ambitiously build in the future at an affordable price?

Elon:
The nice thing about Lithium is that it’s extremely abundant on Earth, Lithium is the third most common element in the universe. The reason we don’t have free hydrogen available is because it is bound up in water. The reason we don’t have a lot of Helium is because it just floats away. Lithium doesn’t float away.

There is Lithium in salt form virtually everywhere, so there is definitely no supply issues with Lithium. But, to answer the question more precisely… “In the next year or two years, will there be enough Lithium in the form that Tesla needs, which is Lithium Hydroxide, in sufficient quantities, at a price that is reasonable, and does not materially affect the cost of the Model 3?…. Um… Over to JB….” (Laughter)

JB Straubel (CTO of Tesla):
We need to make sure we have the extraction and processing capacity, but it isn’t that much different than lining up other supply chain components for the car, it just has a bit more lead time. Tesla has spent a lot of time working with all of the different Lithium companies, all the way from tiny startups to the large name Lithium companies all around the world. We are working with them to figure out what are the most economical and efficient ways to either have them invest, or perhaps even have us be involved, to make sure they are investing in the right timeline to have the capacity ready when we need it.

We are also finding ways to potentially even reduce the cost here below what people have done in the past, because a little like the Gigafactory and the batteries, Lithium is not a mature market. It is not traded on the London Metal Exchange, it is subject to a lot of speculation right now, there is Lithium ‘booms’ that happen in different parts of the world… This does not relate to the actual cost of production of Lithium. That is relatively stable, and as Elon said, there is a lot of it. Once we can appropriately invest in the extraction, refining, and processing, the price of Lithium is quite low and quite stable.

Elon:
It is also worth mentioning that, although it’s called Lithium Ion, the actual percentage of Lithium in a Lithium Ion cell is approximately 2%. Technically our cells should be called ‘Nickel’ or ‘Nickel Graphite,’ because the primary constituent in the cell as a whole is Nickel, and then the anode side is Graphite with a Silicon Oxide. There is a little bit of Lithium in there, but it is like the ‘salt on the salad,’ you know, it’s a small percentage of the mass. It’s still important to avoid supply constraints and to make sure the tail doesn’t wag the dog on cost, but the main determinants of the cost of are the price of Nickel in the form that we need it, and there a bit of Cobalt and Aluminum, and then the cost of the synthetic Graphite with the Silicon Oxide coating.

Parts I found pertinent/interesting:

"...it is subject to a lot of speculation right now, there are Lithium ‘booms’ that happen in different parts of the world ..."

"...the primary constituent in the cell as a whole is Nickel, and then the anode side is Graphite with a Silicon Oxide...."

Not news in terms of batteries, but their attitudes towards Lithium seem almost dismissive. Could we be in a micro-boom?

Expand

I think they have provided an answer that most Tesla investors would like to hear. Should they have instead said something along the lines of '...we are working with various companies however we yet do not have a stable supply in place. Further the majority of lithium hydroxide producers have confirmed that they are not in a position to provide the required quantity at the desired price.... (etc)" what do you think the Tesla SP would be next day? Of course they are going to down play this. If they had any agreement in place they would have confirmed as much. The fact that they didn't suggests that they have yet to find someone that can sell them sufficient quantities.

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Thoughts on this comment by Elon Musk on Lithium supply?, page-2

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