JB Straubel is the cofounder of Tesla and also founder and CEO at Redwood Materials. He believes that electric car sales will explode. 

Straubel says demand is picking up, but the auto industry isn’t moving fast enough to make sure production will be able to keep up.

Straubel said that “this is catching people off-guard” during a TechCheck interview.  This is a very strong shift. It has gone from internal combustion sales declining to EV sales growing by nearly 100% in different areas.

Straubel claims that estimates by the industry that EVs could account for 12.7% in U.S. auto sales may not be accurate. Straubel stated that the industry estimates for EV sales of 12.7% of all U.S. auto sales by 2025 may be too low if one considers how quickly adoption has grown in Europe and around the globe. “It points to a path towards potentially higher percentages than this figure by mid-decade.”

Redwood Materials has spent $1 billion on a McCarran plant to meet this demand, he stated.  It will eventually produce anode copper foil that Panasonic will use to make battery cells. TeslaNevada’s Gigafactory.

Redwood Materials believes the plant will eventually employ over 500 people and produce enough anode foil copper foil each year to supply more than 1 million EVs annually. According to Redwood Materials, the plant will supply anode copper foil in America for the first time. Most of this supply is currently imported from Asia.

Plans for the production of lithium-ion batteries have also skyrocketed as automakers increase production of electric cars. AlixPartners, an industry consulting company, reported that the world’s lithium-ion batteries manufacturing capacity stood at 713 gigawatts. AlixPartners projects that this number will triple to 2,273 gigawatts by 2025. The U.S. battery manufacturing capacity is more than quadrupling.

The conventional wisdom says that the prices of batteries and battery packs will fall as more capacity is added to the grid. This would lower the cost of EVs, and increase profit. 

ESource, an E-commerce consulting firm located in Boulder, Colo. that monitors battery cell prices estimates that the cost per kilowatthour of an automotive lithium battery cell will decrease from $147 by 2022 to $98 in 2025.  These are positive projections, however falling prices will depend upon the ability of the battery supply to grow and support higher demand.   

“With such a high level of battery demand expected over the next decade or so,  the raw materials that go into those batteries are potentially going to be in short supply,” Stephen Brown, a senior director at Fitch Ratings.

Straubel doesn’t believe the EV industry is ready.

He stated that there is a real danger that we might see a repetition of the shortages in semiconductors, which could reduce or hinder EV growth.

Straubel is standing right next to Redwood’s plans for an operation, and admits that the company has to get ahead of the shift from gasoline to electric vehicles. 

He said, “We work twenty-four-seven hours a day, literally round the clock to build facilities such as the one below us in order to make that supply chains happen” and to get ahead of the bottleneck “before it happens.”

This article was contributed by Meghan Reeder, CNBC