Prices for lithium — a key material in electric vehicles — are up over 440% in the past year (per Benchmark) — and electric vehicle (EV) makers are feeling the pain.

What’s the big deal? EV sales surpassed expectations in the past few years — creating a massive lithium shortage and a big problem for EV companies.

• Bloomberg predicts the increase will delay the time EVs take to reach conventional car prices by two years to 2026.
• EV makers are already struggling with rising costs from supply chain issues and rising prices in other parts (i.e. Nickel).

Carmakers have already increased prices several times in the past year — and they’re getting away with it for now. Gas price is a top factor in EV purchases and prices are rising throughout the auto industry.

Jump start production: To meet the 2040 goals set out in the COP26 last year, the world needs 17x more Lithium production than in 2021.

But increasing supply isn’t so simple. The biggest miners have stayed away from lithium — a tiny market compared to iron and copper (per BBG). And of course, politics:

• Serbia blocked plans for Europe’s biggest lithium mine in January — over environmental concerns and protests.
• Chile — the second largest lithium producer (after Australia) — is having trouble getting lithium contracts approved.

Quacks like a commodity: Lithium is still a commodity and trades like one — driven by demand and supply. Between 2017-2020, lithium prices fell sharply as producers flooded the market with supply.

Analysts are divided on whether supply will be in a surplus or deficit in the coming years — remaining cautious:

• BBG commodities columnist believes suppliers and governments will find a way to tap the material.

Citigroup analyst sees the industry catching up and prices normalizing (via Barrons).