Lithium may not be considered a precious metal, but at the rate its price is increasing, it may soon surpass gold and platinum in cost. Lithium, a vital component in today's electric vehicle batteries, is in such short supply that prices have jumped almost 500% in the past year. The rise of electric vehicles is primarily responsible for the spike, though lithium is also used in consumer electronics, pharmaceutical applications, and more.

In some cases, price increases of raw materials don't have an immediate impact on the prices buyers see at the shops, but lithium's ascent is making a difference. Bloomberg reports that the metal's current prices could lead to as much as a $1,000 price increase for a new vehicle. For big-dollar EVs like the GMC Hummer EV or the Lucid Air, it's not such a problem, but for everyday EVs like the Chevrolet Bolt, the price increase can be impactful.

Lithium's explosive growth is at least partially responsible for the unpopular price increases we've seen on big-name EVs. Tesla has bumped the price of the Model 3 a few times in recent months, while Rivian made news when it pushed its prices.

Argentina, Bolivia, and Chile are responsible for more than half of the world's lithium supply. The metal comes from salt deserts, or so-called salars, where it is extracted from underground lakes and pumped out in a brine. Producers have to let the solution sit for up to two years to allow enough water to evaporate for the lithium to be processed. The current methodology for processing lithium is terribly inefficient, as only around 50% of the metal is recovered from the brine. Australia is another major player in the lithium industry, with its supply coming from ore mining.

What can be done? As it turns out, the best way to bolster supply is to simply produce more lithium. A new mine is opening in Canada to help on that front. Of course, the challenge is that lithium brine takes a long time to evaporate, and producers often run into problems with permits and regulations. Producing more lithium also comes at the cost of the environment. It takes literal tons of water to process the metal, and, in the areas that mine materials to get to the lithium, the work is hugely energy intensive.

Car companies are working to reduce their footprint while extracting and processing lithium. Some are developing methods that increase the efficiency of the process to improve the abysmal recovery rate. Solid-state battery tech and sodium-ion batteries will eventually become viable for commercial use, but they're likely years away and will be expensive when they debut.