(Bloomberg) — Elon Musk, the chief of Tesla Inc., indicated that it might begin digging for lithium nearly two years ago. This was due to the skyrocketing price of metal essential to electric cars.

Lithium has joined the turmoil gripping commodities in the wake of Russia’s war on Ukraine. Prices of raw materials rose even before war due to increased demand and supply problems. Benchmark Mineral Intelligence compiled an index showing global lithium prices. It has risen almost 4900% over the last year. China is so concerned about lithium prices that it brought in several market participants for talks over two days. The discussions were focused on stopping a runaway price rise.

Because lithium is the key component for electric vehicle batteries, automakers are racing in order to get supplies. This comes amid an expected surge in demand and global push for electrification. In the last couple of years Tesla signed supply agreements with battery metals producers, one of which was secretly with Vale SA (NYSE):

China has already told its suppliers of EV batteries that it is requesting lithium prices return to sustainable levels in the wake the recent price rise in lithium. Rising prices have caused cost inflation and threaten to hurt consumers’ demand.

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