Elon Musk urges entrepreneurs to get into lithium business, avers 'You can’t lose'

Tesla CEO Elon Musk on Wednesday urged entrepreneurs to enter into the lithium refining business stating that the business is "a license to print money." He called on more people to enter into the business of refining lithium in order to ease the shortages in battery materials.  Musk's request came during Tesla's Q2 2022 earnings call.

"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 adding that there are software-like margins to be made in lithium processing. “You can’t lose, it’s a license to print money,” Musk added. 

During the call, Elon Musk also noted that Tesla sees constraints in the refining of materials to make the battery cells. Further emphasising the need for more people to get into the business of refining Lithium, he added that there isn’t a shortage of the metal on the Earth, however, the challenge lies in processing it to the point that it can be used in battery cells. 

Why is Musk promoting the lithium business?

A major reason behind Tesla CEO encouraging entrepreneurs to get into the business of refining Lithium is to reduce the shortage of metal in the creation of batteries for electric vehicles. 

Despite the presence of lithium in abundance, the soaring lithium prices are discouraging people for electric vehicles (EVs). Constraints on the availability of lithium aren't the reason behind the scarcity of the raw materials, but the actual challenge is the limited global capacity to deliver ultra-high purity battery-grade hydroxide and carbonate chemicals into battery supply chains. 

Soaring lithium prices

According to Benchmark Mineral Intelligence, the global transition towards the manufacturing and purchase of electric vehicles is agitating the demand for lithium in the market.  Another reason behind the soaring prices is the widened gap between supply and demand for the metal. Notably, the prices have been rising for almost everything from the ore of lithium, spodumene, to lithium carbonate and a more refined form, lithium hydroxide.

Lithium batteries are replacing the fuel in combustion engines in a variety of applications. As the penetration of electric vehicles rapidly grows, demand for lithium has grown exponentially.