8/18/14 – Rich in lithium, Coachella could be what Tesla is seeking

From Sacramento Business Journal, 8-18-14

Though it’s impossible to know what Tesla Motors is thinking for the ultimate location of a gigantic battery factory, the Coachella Valley has entered the mix of possible California contenders due to a vast natural supply of lithium in the region’s Salton Sea.

Late last week, U.S. Rep. Raul Ruiz sent a letter to Tesla CEO Elon Musk touting Coachella as “the largest lithium reserve known in the United States.”

“No other region in the country offers you the opportunity to produce batteries for the cars of the future with so much renewable energy potential,” the Palm Desert Democrat said.

Tesla is expected to consume unprecedented amounts of lithium for a giant factory aimed at reducing battery costs for its upcoming third-generation electric vehicle, which the company hopes to sell for about $35,000.

The so-called gigafactory is viewed as one of the greatest economic development opportunities in years and hasset off a rash of speculation in recent weeks on where it might be built. The company has broken ground on a site in Reno, but said it will continue scouting sites across Arizona, California, New Mexico and Texas.

Prices for lithium more than tripled this century with the rise of smartphones, tablets and laptops. But the amount of lithium needed for a car battery is 100 times that which is needed for a computer device. Tesla is expected to consume up to 15,000 tons of lithium carbonate once the gigafactory is fully up and running by 2017, according to the Lithium Exploration Group.

Enter Simbol Materials. The Pleasanton-based company is developing new technology to extract lithium from the Salton Sea, a salty artificial lake connecting Southern California’s Imperial and Coachella valleys. Company executives are ramping up testing of a process that could eventually extract 15,000 tons of lithium per year,according to the Desert Sun.

Tesla has shown interest. Earlier this summer, representatives for the electric car manufacturer met with Simbol, and, according to The Desert Sun, residents report that Tesla has considered locating the factory in the Imperial Valley due to its proximity to lithium.

The Coachella region also boasts abundant solar, wind, and geothermal energy supplies and could provide numerous locations for the plant that may need as much as 1,000 acres of land, Joe Wallace, chief innovation officer for the Coachella Valley Economic Partnership, told Business Journal in an email. Wallace also highlighted a continuous rail line that runs from the Salton Sea to the Bay Area, home of Tesla’s Fremont headquarters.

Nevertheless, Coachella is far from a lock. At one point, Tesla was searching 31 different sites in California, Sen.Ted Gaines recently told the San Jose Mercury News.

Gaines is co-authoring legislation that would provide an incentive package to attract Tesla to California. That package is still under development, but Gaines has said it may include up to $500 million in tax breaks and somesort of exemption from the California Environmental Quality Act.

Nevada, where Tesla has already broken ground, is home to the only commercially active lithium mine in the U.S. Overall deposits in the Silver State’s are second only to those found in Chile, according to the Nevada Governor’s Office of Economic Development.

Moreover, it’s still unclear whether Tesla even needs domestic lithium. In public comments in March, Lithium Exploration Group CEO Alex Walsh said he was confidant Tesla will “buy the lithium they need to run this gigafactory.”

A Chile-based chemical mining firm, SQM, is the largest lithium producer in the world, he noted.

“Tesla could easily acquire SQM and ensure their supply for decades to come,” Walsh said.