Tesla may finalize California as the location of its Gigafactory, as the state’s Salton Sea can be mined for high-quality lithium which is an essential ingredient in Tesla’s electric batteries
Speculation surrounding the final location for Tesla Motors Inc’s (TSLA) massive battery plant (dubbed ‘Gigafactory) is heating up. Among the five states being considered, California, the company’s home state of California, is now a strong contender because the Salton Sea, a rift lake located on the San Andreas Fault in California’s Coachella valley, is potentially an abundant source for of lithium – a major input in Tesla’s high performance electric batteries to be produced at the Gigafactory.
California had been initially ruled out as a ‘long shot’ by the company’s CEO Elon Musk on the basis of lengthy approval processes and stiff regulations in the state. However, Tesla’s interest was rekindled following multiple proposals by the state’s lawmakers favoring the deployment of the Gigafactory, in addition to the developments around Salton Sea, being led by Simbol Materials.
Simbol Materials – a Pleasanton-based private company – has set up a demo plant at a geothermal plant in Calipatria, California and is demonstrating a highly disruptive technology which extracts high-quality lithium from geothermal brine, a residue of geothermal energy production at the site.
Lithium is currently imported in the US from countries like Argentina and Chile. An expansion of the project, which Simbol Materials is aiming to undertake by external fund raising, should, to an extent,ease the federal trade budget while generating the needed funds for restoration projects at the rapidly drying Salton Sea.
A recent study conducted by the Imperial Irrigation District estimates $1.5 billion in revenues from lithium extraction projects at Salton Sea over the next three decades.
If Simbol Materials manages to scale up its operations in the region, Tesla may well deploy its Gigafactory in close vicinity to the lithium supply source. This, coupled with its already established manufacturing facility in Fremont, will lend the company a stark logistical edge in controlling costs – the primary goal of building the $5 billion, ten million square feet Gigafactory in the first place.
In its second-quarter earnings conference call held on July 31, the company announced that it had broken ground in Nevada, the first of at least two sites it is considering for initial development work before it finalizes a location by year’s end. While some analysts are already weighing the chances of Nevada as an eventual winner, the possibility of the Gigafactory staying within California cannot be ruled out.