US-based automotive company Tesla is assessing the feasibility of building a battery-grade lithium hydroxide refining facility on the Gulf Coast of Texas, to support its production of electric-vehicle (EV) batteries.

In a letter to the Texas Comptroller’s Office, the carmaker said it is looking to build the facility, which the firm touted as the first of its kind in North America, to process raw ore material into a usable state for battery production, reported Reuters.

Lithium hydroxide, a key component used in EV batteries, is expected to be then shipped to various Tesla battery manufacturing factories through trucks and rail.

Tesla’s plans to invest in the new Texas-based refining facility is said to be contingent on the ability to secure relief on local property taxes.

The proposed facility is planned to be located at a site with access to the Gulf Coast shipping channel, reported CNBC.

In the application, the automaker said it is also considering ‘other battery materials processing, refining and manufacturing and ancillary manufacturing operations in support of Tesla’s sustainable product line’, according to the publication.

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Earlier, Tesla CEO Elon Musk said the company could directly enter the mining and refining industry at scale as prices surge for lithium.

Subject to approval, the company plans to start construction on the lithium plant in the fourth quarter of 2022 with commercial production scheduled by the end of 2024.

Tesla’s new facility will use innovative processes that will consume less hazardous reagents and ‘create usable by-products compared to the conventional process’, according to Bloomberg News.

Tesla could become the first in the auto sector to make a direct investment in lithium refining as automakers look to secure the supply of lithium, prices of which have increased this year due to growing demand from the sector.