It is shaping up to be a relatively solid day for ASX lithium shares on Thursday. At the time of writing, the majority of companies on the ASX associated with the all-important battery commodity are in the green.

However, as Tesla Inc (NASDAQ: TSLA) techno-king Elon Musk outlined during the electric vehicle (EV) manufacturer’s earnings call this morning — not all lithium companies are created equal. In fact, there is one specific part of the lithium value chain in which Musk sees immense economic reward.

Let’s take a closer look at what Musk said and the ASX lithium shares it might involve.

Money printing machine within lithium

This morning, shareholders listened attentively to Tesla’s second-quarter earnings call. But for some investors, Elon Musk’s comments around lithium took centre stage. In answering a question about how inflation will affect EV prices, Musk shared his insights into the lithium industry.

For most commodities, we’re seeing a downward trend towards the end of this year or next year. Some commodities… the processing of lithium is insane. I’d like to once again, urge entrepreneurs to enter the lithium refining business.

On initial inspection, Musk’s expectation for commodity prices to trend lower may not sound too optimistic for ASX lithium shares. However, the serial entrepreneur quickly draws a line in the sand, putting ‘lithium refining’ in a separate category.

Elon Musk reiterated the attractive economics offered in lithium refining at the moment, stating:

It [lithium refining] is basically like minting money right now. There’s like software margins in lithium processing right now. So, I really like to encourage, once again, entrepreneurs who enter the lithium refining business. You can’t lose, it’s a license to print money.

ASX lithium shares soar in response

Following this morning’s comments, many ASX lithium shares have gone on a stampede to the upside. For example, here are some of the best-performing lithium companies today:

• Novonix Ltd (ASX: NVX) up 9.4%
• Liontown Resources Limited (ASX: LTR) up 7.6%
• Lake Resources N.L. (ASX: LKE) up 7.5%
• Vulcan Energy Resources Ltd (ASX: VUL) up 7.4%

However, as per Musk’s comments, it is the lithium refiners of particular interest. Novonix could be garnering the highest performance as its synthetic anode production might be more accustomed to refining than mining.

Likewise, IGO Ltd (ASX: IGO) is another ASX lithium share that could soon be categorised as a refiner. On 20 May 2022, the mining company announced that its first battery-grade lithium hydroxide had been produced from the Kwinana refinery.

The post ‘You can’t lose’: Which ASX lithium shares operate in Musk’s sweet spot? appeared first on The Motley Fool Australia.

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More reading

• Why is the Novonix share price launching 5% higher today?
• Down 76% this YTD, can the Novonix share price claw back gains?
• IGO share price declines 7% amid commodity fears
• Novonix shares: What does the next year hold in store?
• 3 ASX lithium shares that flew in FY22, and 1 that sank

Motley Fool contributor Mitchell Lawler has positions in Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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