“You can’t have profit margins that are 10 times what it costs to extract,” said Shweta Natarajan, a partner at Mobility Impact Partners who has analyzed the lithium market. The federal government is awarding grants worth tens of millions of dollars to lithium prospectors and processors.

Given those fat profit margins, investors and banks are eager to invest in, or lend to, mining and processing projects. It sells for 10 times that amount, according to Mobility Impact Partners, a New York private equity firm that invests in the electric vehicle industry, among other areas. The metal, uniquely suited for batteries because of its ability to store energy, costs about $5,000 to $8,000 per ton to produce. This month, Tesla lowered the prices of its two most expensive cars, the Model S sedan and Model X sport utility vehicle, by thousands of dollars.Įven after falling so much, lithium prices remain so high that mining and processing the metal is an unusually profitable business. Instead, the drop in commodity prices has made it easier for carmakers to cut prices for electric vehicles. The sharp moves have confounded many analysts who predicted that prices would stay high, or even climb, slowing the transition to cleaner forms of transportation, an essential component of efforts to limit climate change. mines and copper-rich countries like Peru are struggling to increase production. Copper, essential to electric motors and batteries, has slipped about 18 percent, even though U.S. Cobalt, another important battery material, has fallen by more than half. Since January, the price of lithium has dropped nearly 20 percent, according to Benchmark Minerals, even as sales of electric vehicles have soared. But something surprising has happened recently: The metal’s price has fallen, helping to make electric vehicles more affordable. Lithium, the common ingredient in almost all electric-car batteries, has become so precious that it is often called white gold.

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