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The price of lithium has dropped by over 20% since January — here's why experts think car prices will follow suit

Meanwhile, cobalt prices have dropped by more than half.

Falling lithium prices

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The price of lithium — the common ingredient used in nearly all car batteries — has dropped nearly 20% since January, making electric vehicles (EVs) more affordable than ever.

Meanwhile, cobalt prices have dropped by more than half, while copper has fallen by 18%. Cobalt is another important material found in batteries, while copper is used in electric motors and batteries. 

Experts can't quite figure out why prices are dropping, but it's good news for consumers who want to invest in an EV, as it's allowing carmakers to slash prices. 

"For electric vehicles, the major roadblock is cost," Kang Sun, the CEO of Amprius Technologies, told the New York Times. He concluded that the falling price of lithium would boost EV sales.

Already, Tesla lowered the prices of its two most expensive cars — the Model S sedan and Model X sport — by thousands of dollars in March. The company had also slashed prices in January, partially to make some of its vehicles eligible for the new $7,500 EV tax credits that are part of the Inflation Reduction Act. 

But it's not just Tesla that's cutting prices. The average price of an EV in the U.S. fell by $1,000 in February.

A transition from dirty energy-burning cars to more electric vehicles would be a win for the environment. While the production of EV batteries releases planet-warming gasses, an EV releases far fewer of these gasses than a conventional one (more than one-third of an EV's lifetime emissions come from the energy used to make the car itself). 

That said, EVs don't come without their own set of environmental concerns. Traditionally, the mining of the minerals used in their production, including lithium, is associated with dirty energy sources like oil and gas. Hard-rock lithium mining scars the landscape, uses a lot of water, and releases a lot of air pollution. However, experts are coming up with cleaner, more environmentally-friendly ways to extract these minerals.

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