Tesla has raised the prices of its car several times since the start of the year. While the company does not normally announce reasons for the price hikes, CEO Elon Musk this month complained about raw material prices and supply chain shortages.

In an interview with a Tesla owners group, Musk said, "Both Berlin and Austin factories are gigantic money furnaces right now," adding that he was worried about how Tesla would keep these factories running without going bankrupt.

Raw material inflation is ubiquitous right now, but in some commodities, it is a lot more pronounced, and lithium is one of them. According to a Wall Street Journal report from this week, one big reason may be the pricing model for lithium.

Spot prices for the most popular forms of lithium—lithium carbonate and lithium hydroxide—have risen fivefold over the past 12 months, the WSJ's Stephen Wilmot wrote. Yet this has not attracted as much attention as the oil price rally, which, in absolute terms, was a lot more modest, because there isn't much of a spot market for lithium. And this, Wilmot argued, may be part of the reason why lithium producers are not in a rush to boost supply in response to strong demand from EV makers.

Now, most lithium is sold directly by producers to consumers such as carmakers at fixed prices far below those on the spot market, Wilmot explains, but a growing number of contracts are now being indexed to the lithium spot market to reflect differences in volumes or in quality. The next step: a futures market.

A futures market would mean lithium trading has evolved and matured. It would mean there is enough stable demand for lithium to ensure future purchases in volumes big enough to merit mining expansions and new developments, theoretically. Yet a futures market would also need benchmarks, and this may be tricky. 

There is also the factor of time. Mature markets do not happen overnight, even when demand for the commodity—or specialty chemical, as Albermarle, for instance, likes to call lithium—is as great as the demand for lithium right now. And then, it will take time for supply to catch up after that market evolves.

Goldman Sachs last month sparked outrage by calling an end to the bull market in lithium, saying that there has been a "fundamental mispricing [that] has in turn generated an outsized supply response well ahead of the demand trend." In other words, Goldman is arguing that supply is already greater than demand.

Naturally, this prompted reactions, among them a note by Benchmark Mineral Intelligence, a firm that tracks and reports specifically on battery minerals. Among fundamental reasons, such as quality issues with much of the available lithium and geological challenges for new supply, Benchmark also made a note about prices.

"There is no single lithium price," the agency wrote this month, as quoted by Mining.com, explaining that the fact most lithium trading is done under fixed contracts while there's a spot market operating in parallel means it will be a while before spot prices and fixed-term prices begin to converge. Until that happens, the imbalance between supply and demand will likely remain considerable.