There is a race for lithium going on in Nevada

Ever since Tesla announced plans to build a battery plant in Nevada, investors have started paying attention to the silver state's lithium deposits.

Ever since electric carmaker Tesla (TSLA) announced plans to build a battery plant outside Reno, Nevada, investors, fans of Elon Musk 's company and others around the world have started paying attention to the silver state's large lithium deposits.

Lithium is a key component in the production of batteries used in cell phones and electric vehicles. As sales of electric vehicles, which topped 500,000 worldwide last year, increase, so is demand for lithium.

"Every new mine that we can find needs to be brought online and it needs to be done as fast as possible," said Patrick Highsmith, CEO of Pure Energy Minerals (PE-V).

Highsmith's company is exploring how much lithium is in the water tables deep below theNevada desert in Clayton Valley. This valley, halfway between Las Vegas and Reno, is ringed by mountains and home to one of the largest lithium deposits in North America. That's why companies such as Abermale have been here for years extracting lithium in a time consuming process of pumping water into huge extraction pools where the water evaporates and eventually leaves the salt, potash, and lithium.

Using evaporation to mine lithium is an old and time consuming process, taking well over a year to produce lithium.

Pure Energy Materials, a mining company based in Canada , is hoping to cut down on that time by extracting the lithium brine from the ground and processing it immediately in Nevada to make lithium hydroxide that will be used to make batteries.

"Instead of taking 18 months or two years like with a large evaporation pond, this is an industrial process that works in a matter of hours," said Highsmith.

Pure Energy Materials has already inked a deal to supply the electric car company with lithium, provided it can do it economically. Making the numbers work is crucial to Tesla as it ramps up production of its Gigafactory just outside of Reno, Nevada. That facility will be supplying lithium-ion batteries for energy companies as well as Tesla vehicles, including the mass market Model 3 going on sale late next year.

One key to making money on Model 3 vehicles, which are expected to start at round $35,000, is for Tesla to bring down the cost of the lithium-ion batteries that will power the cars.

If Tesla's Gigafactory grows as fast as the company projects, Clayton Valley stands to profit. As Highsmith watched his company's exploration well pump out lithium brine, he thought about how much is at stake.

"We're probably only a few years away from a successful mine development, but we've got a great discovery here and we're continuing to advance it,' he said.

Questions? Comments? BehindTheWheel@cnbc.com .