Elon Musk is right: Getting enough lithium is one of the biggest challenges facing electric-car companies

The silvery-white metal is important to making electric-car batteries. He said anyone who enters the refining business gets a license to print money because of the insane costs of metal.

There is a point to be made by the billionaire. As the auto industry shifts away from dirty fossil fuels and toward cleaner battery power, it's in the spotlight as well. The price of the metal has gone up as demand has gone down.

There are still questions about whether the world will be able to mine, refine, and ship enoughlithium to support the green revolution. We've laid out the basics of why it's important.

What is lithium and what is its role in electric cars?

It's important in the batteries that power electric cars. It is in laptop batteries.

Why is Musk going on about it? 

Car companies have increased sales of electric cars in the last few years.

According to McKinsey, the price oflithium had risen 550% over the previous year. According to S&P Global Commodity Insights, there will be a shortage of metal for at least the next five years.

It's clear why Musk wants entrepreneurs to process more. It is necessary to purify raw lithium before it can be used in batteries.

Sam Abuelsamid, principal e-mobility analyst at Guidehouse Insights, told Insider that securing enoughlithium is one of the biggest challenges for automakers. He said that there wasn't much demand for the metal until EV's took off. The industry is trying to increase supplies.

"We will probably be okay in the next three to five years," he said. There is a high risk that we won't have enough lithium in the last half of the decade if the other sources aren't developed quickly.

What are car companies doing about it?

Uncertainty around the supply oflithium has caused automakers to go straight to the source and get their own supplies. 600,000 electric vehicles will be built by Ford every year starting in 2023. Similar deals have been made by GeneralMotors.

They have made deals with US suppliers. After being burned by the computer-chip shortage, the automotive industry wants to avoid being overreliant on imports. South America and Australia are home to most of the current supply.

The company said it's looking into processing the metal. The best way to learn how to accelerate something is to do it yourself and that's what we're doing.

Are there environmental costs to mining lithium?

Local water supplies are being adversely affected by the excessive drain on them from the mining operations. Steve Christensen is the executive director of the Responsible battery Coalition.

One way to make electric-vehicle batteries more eco-friendly is to focus more on recycling. The need to mine and refinelithium would be greatly reduced if battery recycling was expanded and made more efficient.

He said that he was with Musk that he could print his own money. If we could get an incentive for recycled content in batteries, you can create a money printing machine on the recycled materials.