With lithium prices skyrocketing from $17,000 per tonne in 2021 to a whopping $78,032 per tonne in 2022, Tesla CEO Elon Musk thinks the electric vehicle (EV) maker may itself have to get into mining and refining the mineral at scale to keep production costs in check.
“Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale, unless costs improve,” Musk said on Friday, replying to a tweet outlining the changes in lithium pricing over the last decade.
Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale, unless costs improve.
There is no shortage of the element itself, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow.
— Elon Musk (@elonmusk) April 8, 2022
Lithium is integral to the production of EV batteries. With EV uptake gaining momentum across the globe, the lithium supply chain has been stretched thin to meet demand and costs continue to trend sharply upwards.
Musk said last month that Tesla and SpaceX were “seeing significant recent inflation pressure in raw materials and logistics.” As a result of the growing inflationary pressure, Tesla increased prices across its entire lineup of vehicles.
Tesla & SpaceX are seeing significant recent inflation pressure in raw materials & logistics
— Elon Musk (@elonmusk) March 14, 2022
If lithium costs continue to rise, the EV pioneer may be forced to further hike vehicle prices to account for the additional overhead.
Other EV makers also face the same future — electric truck maker Rivian increased prices by up to 25% last month due to the climbing costs of raw materials and production, before rolling back to the original prices for pre-order holders after significant pushback.
“There is no shortage of the element itself,” Musk went on to explain in his tweet. “Lithium is almost everywhere on Earth, but pace of extraction/refinement is slow.”
Global lithium mining and refinement efforts require massive cash infusions to boost operations and meet mounting demand. And who better to bankroll the expansion of an entire industry than the world’s wealthiest man?
