Winnipeg Free Press

Winnipeg Free Press (Newspaper) - January 13, 2025, Winnipeg, Manitoba B4 MONDAY JANUARY 13, 2025 ● BUSINESS@FREEPRESS.MB.CA ● WINNIPEGFREEPRESS.COM BUSINESS Musk’s massive Tesla lithium plant hunts for water in drought-fraught Texas T HIRTY kilometres outside Corpus Christi, Texas — an area so dry the local water company distrib- utes shower timers at high school foot- ball games — the world’s richest man is nearly done building a lithium refinery that could require as much as eight mil- lion gallons (30 million litres) of water per day. In a rare public update on the US$1 billion project, Tesla Inc. in December said it was starting to test the ability to process lithium through the new factory. But the carmaker still doesn’t have a contract for the water needed to operate the facility, presenting a hurdle for CEO Elon Musk’s goal of turning lithium into chemical products used to make electric vehicle batteries. The factory, where Tesla aspires to start production this year, is part of a broader effort by Musk to ease bottle- necks and build a more robust U.S. do- mestic supply chain of the critical raw material. It has also set off alarm bells among some in the small Texas town who are worried about having enough water to live on, let alone help supply a big fac- tory. In 2022, Tesla estimated it would need 400,000 gallons per day to run the lithium plant, rising to 800,000 gallons per day at peak usage. Two years later, a Tesla employee told a consulting firm, Raftelis, that the forecast has spiked to as high as eight million gallons per day, according to South Texas Water Au- thority records obtained by Bloomberg News through a public records request. South Texas Water Authority controls the water but doesn’t sell it directly to Tesla, which is negotiating a water con- tract with Nueces Water Supply Corp., a water utility company. Nueces Water Supply didn’t respond to requests for comment. South Texas Water Authority didn’t provide a comment for this story. It’s difficult to determine what kind of drain Tesla’s factory would have on the area’s water supply. But the aver- age American family uses about 300 gallons of water per day or 109,500 gal- lons per year, according to the Environ- mental Protection Agency. For Robstown, which had 3,804 house- holds as of 2023, that would equate to about 1.1 million gallons a day. At the high-end estimate of eight million gallons per day, Tesla would be using eight times Robstown’s average residential water use. That’s enough water to fill eight 10-foot-deep swim- ming pools that are nearly the size of a football field, according to the U.S. Geological Survey. It’s always been dry in this hot cor- ner of South Texas best known for its beaches and energy exports — but there’s even less water to go around to- day than when Tesla first broke ground in May 2023. The area’s drought status was just upgraded to Stage 3 — urgent — mean- ing turning off non-essential water use across facilities and parks and add- ing new restrictions on washing cars, watering lawns and operating decora- tive fountains. “They’re telling us to take shorter showers and turn the faucet off when we’re brushing our teeth,” said Marie Lucio, a resident of the nearby Lost Creek neighbourhood. The area already has frequent prob- lems with water quality, including low pressure and a milky-like tint, and she’s worried the area’s aging water pipes won’t be able to keep up with new demand like the Tesla factory. “We’re not equipped to handle getting water to these industries.” About a year into construction, Tes- la’s plant manager Jason Bevan told a county judge the company had “strug- gled to advance the discussion” on water agreements, an email obtained by Bloomberg News shows. “I’m at a stage now where we need to escalate the urgency around getting this agree- ment complete,” he wrote at the time. Tesla didn’t reply to a request for fur- ther comment. Even without a water agreement, Tes- la has plowed ahead. In true Musk fash- ion, the billionaire has pushed forward with building other infrastructure and held an event last month showcasing the plant for the community. Musk is known for pushing back against regulations, often saying they slow projects down. And he now has a new political ally in U.S. president-elect Donald Trump, who has joined the Tes- la CEO in railing against government regulation. Trump recently proclaimed any person or company investing a billion dollars in a U.S. project should receive expedited approvals and permits. Musk reposted the idea with an American flag emoji, a rocket ship emoji and three words: “This is awesome.” One way he’s been able to expedite projects has been to build factories in Texas cities’ buffer zones or unincor- porated areas that have fewer rules and government oversight compared with bigger cities. Musk’s Robstown site fits the bill. The factory sits on former farmland in an un- incorporated portion of Nueces County in South Texas. The area is industrializ- ing, with the Port of Corpus Christi and other companies buying up space in the area and driving up water needs. Even at the lowest estimated demand, Tesla’s water needs are raising con- cerns for local residents. “It’s just upsetting that we still give water contracts out when we’re in such dire straits,” said Myra Alaniz, a Nue- ces County resident who lives just out- side of Robstown. Despite the complaints, local officials have made little public pushback. The facility is expected to bring around 250 permanent jobs, with aver- age salaries around US$80,000 in an area where the average income is less than half that. To spur investment, county commissioners in 2022 voted to make the site a tax increment re- investment zone, a designated area that bookmarks a portion of property taxes for redevelopment. The same year, the Robstown Independent School District passed its own tax abatement extension. In December, South Texas Water Au- thority passed an infrastructure deal that will allow Nueces Water Supply to sell rights to the pipe Tesla will need to obtain water, which was one of the hold- ups for a water deal. In a meeting last month, Nueces Water Supply’s board authorized management to “take any and all actions necessary or convenient” to reach an agreement to provide Tesla with the water it needs. — Bloomberg News KARA CARLSON PHOTOS BY KARA CARLSON / BLOOMBERG Tesla’s lithium refinery under construction in Robstown, Texas. In 2022, Tesla estimated it would need 400,000 gallons per day to run the lithium plant. Two years later, the forecast has spiked to as high as eight million gallons per day. A municipal water facility in the Lost Creek neighbourhood near Tesla’s refinery. Oshkosh ready for possible USPS shift to gas trucks from EVs OSHKOSH Corp. is prepared to provide the U.S. Postal Service more gas-pow- ered mail trucks if the agency cuts back orders for electric vehicles, which bene- fit from funding U.S. president-elect Donald Trump has criticized. “We’ll do what they want us to do — supplying either gas or electric,” John Pfeifer, chief executive officer, said in an interview at the CES trade show in Las Vegas. “A new Congress could come in and repeal, I guess, part of the IRA that hasn’t been spent.” President Joe Biden’s Inflation Re- duction Act provided US$3 billion over 10 years to transition the Postal Service to an electric fleet, including US$1.3 billion for vehicles and US$1.7 billion for charging stations. The agency has said it plans to buy more than 100,000 delivery vehicles through 2028, of which at least 62 per cent will be fully electric. Postmaster General Louis DeJoy last month told Bloomberg his independent agency needs to replace aging mail trucks and he hasn’t heard from the incoming presidential administration about its planned electric vehicle pur- chases. But Trump’s team is looking at wheth- er it can get out of USPS contracts with Oshkosh and Ford Motor Co., Reuters has reported, citing people familiar with the matter. Republican House Speaker Mike Johnson also has said Biden’s signature climate law would be an early target for the new Congress. Pfeifer said the company hasn’t been contacted by the Postal Service or the incoming administration about shifting from EVs. Shares of Oshkosh fell 2.75 pre cent Friday to US$89.56 in New York. Electric powertrains account for nearly three-quarters of the delivery trucks the Postal Service has ordered from Oshkosh, the CEO said. Some of the components come from Ford, which also has its own contract for USPS ve- hicles. A representative for Oshkosh said it has received its first order from USPS for 50,000 Next Generation Delivery Vehicles, which is valued at US$2.98 billion. If the USPS contract’s EV compon- ent is reduced to zero, it would likely mean a 50-60 cent US per share hit to Oshkosh’s 2026 and 2027 earnings per share, Citi analyst Kyle Menges has es- timated. While electrified postal trucks cost more up front than gas-fuelled ver- sions, their advantage is low operating expenses in areas such as maintenance and refuelling, according to Pfeifer. “The postmaster general knows that’s one of the keys to him turning around the financial performance of the postal service because the running costs are so much lower,” he said. — Bloomberg News CHESTER DAWSON CHESTER DAWSON / BLOOMBERG The Oshkosh Corp. electric U.S. Postal Service truck. Prada eyes Versace purchase, Sole says ITALIAN fashion brand Prada could be evaluating a purchase of the Versace label, daily Il Sole 24 Ore reported Friday, citing market speculation. Versace owner Capri Holdings Ltd. has pitched the deal to Prada and other pot- entially interested investors, the news- paper said. The luxury house could be working with financial and legal advisers to decide whether to pursue an accord, the newspaper said, citing “rumours.” A representative for Prada declined to comment. Versace owner Capri Holdings Ltd. has hired Barclays to explore options for the label and other brands in its portfolio, ac- cording to the Sole report. It comes after an US$8.5-billion combination attempt between Capri and Tapestry, Inc. was scrapped due to regulatory issues. — Bloomberg News ;