Oil majors are investing in the electrification sector as governments in the United States and Europe set programs to promote wider use of electric vehicles and reduce fossil-fuel consumption.
Exxon said it will start production from briny waters pumped out of the ground in an area in the state of Arkansas known to hold significant lithium deposits to help develop a domestic source of the metal.
"In the long term, lithium really is a global opportunity," said Dan Ammann, president of Exxon's Low Carbon business unit. "We are starting here because there is an urgent need to ramp up domestic production of these critical materials."
Exxon plans to supply lithium for well over 1 million EVs per year and become a leading supplier of the metal by 2030. Analysts at financial firm TD Cowen estimate its goal would require some $2 billion in capital expenditures to provide 50,000 tonnes, a volume that could generate $800 million in potential cash.
Ammann did not disclose how much Exxon intends to invest in the lithium business, or when it might become profitable.
The largest U.S. oil company said it would use conventional oil and gas drilling methods to access lithium-rich saltwater from reservoirs about 10,000 feet underground and then use direct lithium extraction (DLE) technology to separate lithium from the saltwater.
The company's majority-owned Canadian affiliate, Imperial Oil (IMO.TO), also has invested in a lithium-extraction pilot project in Alberta, Canada.
Exxon plans to begin production with partner Tetra Technologies (TTI.N), Reuters exclusively reported on Saturday. It will produce the metal onsite and sell it under the brand name Mobil Lithium, the company said on Monday.
Exxon had acquired the rights to 120,000 gross acres of the Smackover Formation in Arkansas, a potential hub of activity for lithium brine aspirants, earlier this year.
European oil rivals BP (BP.L) and Shell (SHEL.L) have invested in EV charging stations as part of their energy transition strategy. A Deloitte study released earlier this year showed investors would like to see more spending on such technologies.
Exxon, which invented the rechargeable lithium-ion battery in the 1970s, but stepped away from the technology, has no plans to invest in EV charging stations, Exxon's Ammann said.
It wants to supply lithium for EV batteries, consumer electronics and energy storage systems that can hold electricity generated from intermittent solar and wind power.
There are about 280 million vehicles in the United States today, and fewer than 3 million are EVs, or about 1% of the total, Ammann said.
"There is still 99% to go, which suggests it is a very, very big opportunity," he said.
