California’s ‘Lithium Valley’ project powers up EV battery boom with millions in tax breaks

During a press conference yesterday, supervisors in Imperial County, California, announced they had voted unanimously to offer tax rebates, property tax deductions, and the potential for further incentives to any and all battery manufacturers willing to produce Lithium products within the county’s lines. The county shared it is also seeking federal funding and state programs to support its “Lithium Valley” project with hopes of bringing more battery manufacturing to California.

With the global demand for lithium projected to expand tenfold over the next decade on the wings of soaring EV production and demand, the state of California looks to capitalize on its reserve of the precious element by bringing more industry within its borders.

According to the US Geological Survey, the US is only providing 1% of the global lithium being mined and processed. In California especially, the Salton Sea, located in Imperial County, sits as a geothermal resource area believed by many to have serious potential to become a competitive source of lithium.

Under advisory from the US Department of Energy, several projects have been created to establish a “Lithium Valley” in Southern California with hopes to not only garner a larger piece of the elemental pie but reduce the nation’s dependency on other countries for materials vital to current EV battery manufacturing.

In recent years, supervisors from the Board of Imperial County have established conversations with both state and federal governments to realize the full potential of the Salton Sea – a land that once offered a resort community through the 1960s until a shrinking of the lake and contamination from nearby farm runoff led to a massive rise in salinity and death of local wildlife.

Today, the stinky Salton Sea remains home to few, mostly motorsport enthusiasts taking their toys through the desert. Imperial County, however, sees a second life for its Salton Sea as the geothermal activity below the water continues to loosen up lithium that can be mined.

Yesterday, the county’s board announced major tax breaks for battery manufacturers to incentivize them to set up shop in California. Imperial County board chair Ryan Kelley said it best:

Samsung, LG, Panasonic, come to Imperial County. We’ll give you some carne asada, and we’ll show you where it’s at.

I can’t express how California that statement is. Carne asada does sound nice, but up to $1 million in tax rebates probably sounds even better.

Imperial County looks to become California’s Lithium mecca

According to a livestream press event held in Southern California yesterday, the board of supervisors for Imperial County have approved a $50 per-metric-ton rebate on California’s recent lithium severance tax as long as local lithium producers sell their lithium to manufacturers that are also operating in Imperial County. Furthermore, those EV battery manufacturers, for instance, could also receive tax rebates.

EnergySource, a local independent geothermal power producer already involved in the Salton Sea project, could receive up to $1 million a year in rebates by producing 20,000 tons of lithium sold to battery manufacturers in the county, according to Ryan Kelley.

In addition to the unanimous vote for tax rebates, the county board shared it will also opt to join a state capital investment program that could deliver up to 10 years’ worth of partial property tax deductions. Kelley went on to explain that a qualified capital investment of $1 billion could equate to an $80 million deduction of property taxes over the course of a decade.

At the federal level, county officials are also seeking $1 billion to implement a freight rail depot to transport the lithium to other parts of California, as well as other areas in the US like the port of New Orleans, for example. The county has also requested $50 million from the US government to repave roads and fix bridges to again support the logistics of California lithium mining.

Federal representative for Imperial County, Raul Ruiz (D-Indio), plans to continue his work with the board as it hopes to implement a direct liaison between the county and the US Department of Energy. Ruiz spoke to the Salton Sea’s potential as a major source of lithium to automakers and beyond in the US:

Today, the Imperial County Board of Supervisors took an important step forward in realizing the full potential of the lithium at the Salton Sea. I have long envisioned a Salton Sea region that leads the way in renewable energy development in an environmentally conscious manner.

To date, only Los Angeles-based company StateVolt has committed to erecting a $4 billion battery manufacturing plant in Imperial County, but other manufacturers like GM and Korean battery makers, like LG Energy Solution and Panasonic, have already expressed interest.

These incentives should prove enticing for global automakers as many scramble to establish battery production on North American soil so their EVs once again qualify for federal tax credits under new terms outlined in the Inflation Reduction Act that (partially) kicked in on January 1, 2023.

You can watch the full press event from Imperial County outlining its plans for California’s “Lithium Valley” in the video below.