Tesla urges Australia to give tax credits for battery supply chain investment

Tesla’s Model 3 being brought into an Australian mall. (Image by Tesla, Instagram).

Electric-vehicle giant Tesla Inc. says Australia should offer tax incentives to transform the mining nation into a hub for processing the minerals used to manufacture batteries.

“Australia can be more than a ‘dig and ship’ nation,” Tesla chair Robyn Denholm told a conference in Canberra on Tuesday. The Biden administration’s Inflation Reduction Act, a climate bill signed into US law last year that offers tax credits to producers, is a “proven mechanism” for delivering the necessary investment, she said.

Australia is among those nations with ambitions to disrupt China’s dominance of the supply chain for the batteries that power electric vehicles. The government in Canberra released a Critical Minerals Strategy in June, which includes a target of luring A$500 million ($320 million) in foreign funding for projects vital to the energy transition.

“The longer we wait, the greater risk we have of this opportunity passing us by as other countries – without necessarily as much underlying minerals – leapfrog us into capturing the most valuable parts of the battery supply chain,” said Denholm, who’s Australian.

She said Tesla has spent over A$4.3 billion in Australian minerals in 2023, more than triple the A$1.3 billion it spent in 2021.

Although Australia produces more than half the world’s lithium, the vast majority is shipped to China, which has a stranglehold on downstream processing into battery-grade chemicals. While there are three lithium refining projects being developed in Australia now, the country needs 30 more to “compete on the world stage,” Denholm said.

China is a key production base for Tesla’s cars. Elon Musk’s company operates a factory in Shanghai that accounts for more than half the US company’s global output.

Tesla’s vision is for every major region to host its own supply chain, co-located with manufacturing operations, Denholm said.

(By Annie Lee)


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