New Delhi: Tesla CEO Elon Musk took to microblogging site Twitter on Saturday to express concern over the rising cost of lithium – a key raw material in the batteries that power electric vehicles at around the world, even going so far as to suggest that the company would move into direct mining and large-scale refining if costs do not improve.

Strong demand for electric vehicles around the world has created a mismatch between demand and supply and lithium prices have seen the biggest one-year increase in 2022 in more than two decades. Prices have risen steadily from $4,450 per ton in 2012 to $17,000 per ton in 2021, but have more than quadrupled to over $78,000 per ton so far in 2022.

“The price of lithium has reached insane levels! Tesla may in fact have to go straight to large-scale mining and refining unless costs improve,” Musk tweeted. “The element itself is not missing, because lithium is almost everywhere on Earth, but the rate of extraction/refining is slow.”

“We have some exciting ideas for sustainable lithium mining and refinement,” he added in another tweet.

Even as lithium prices rose, battery prices fell sharply over the decade thanks to more research, advanced chemistries and better packaging. But the sharp rise in lithium prices will also have an impact on battery prices.

According to a Bloomberg NEF estimate from November last year, lithium-ion battery prices fell sharply from $1,220 per KWh (kilo-watt hour) to just $140 in 2020. In 2021, however, the drop had been modest. by 6% to $132 per KWh and Bloomberg estimated a marginal price increase to $135 per KWh in 2022, adding that battery prices would likely fall below the magic $100 per KWh when they reach price parity with their fossil fuel counterparts, only by 2024. That was five months ago, however, and did not take into account the sharp rise in the price of the metal this year. A revised estimate would likely show a sharper peak for 2022.

High lithium prices would also impact the story of electric mobility in India. The country does not have significant lithium resources and depends on imports. Already, companies have started to feel the pinch and prices for electric vehicles have started to rise.

Last month, Ola Electric founder Bhavish Aggarwal said prices for the S1 Pro scooter would rise when the company opens the window for the next round of bookings. Big rival Tarun Mehta or Ather had also complained about high commodity prices in general.

“These commodity prices are CRAZY! This is the strength of the auto market that companies are always on,” Mehta tweeted on March 15.