Tesla Inc’s (NASDAQ: TSLA) plans to directly mine and refine lithium at scale is a true example of vertical integration in an organization, CNBC reported on Sunday, citing Gene Munster, founder-analyst at venture capital firm Loup Ventures.

What Happened: CEO Elon Musk on Friday tweeted Tesla may directly mine and refine lithium at scale due to the rocketing prices of the metal, a key ingredient used in making electric vehicle batteries.

“I am not surprised … this is true vertical integration,” Munster said.

“Ultimately, [it] is an understanding about what it takes to build a car, a computer on wheels, in the future. This is a step beyond that.”

Munster said none of the legacy automakers have been following the same approach. 

Musk has earlier raised the idea of Tesla mining its own lithium.

“I think there's a high probability that they will ultimately go there.”

See Also: Why Tesla, Rivals Could Find It Tough To Launch Affordable EVs If Russia-Ukraine War Keeps Raging

Why It Matters: Tesla was among the first automakers last month to announce significant price hikes. Nickel prices skyrocketed to record highs amid a supply squeeze caused by the Russia-Ukraine conflict. Lithium prices have soared higher as well.

Tesla is not alone as legacy automakers around the world are rushing to secure supplies of raw materials that go into making EV batteries. 

Demand for lithium and nickel is expected to soar as global economies and companies switch to EVs. Prices of the key metals used for battery making have already rocketed to new highs.

Price Action: Tesla shares closed 3% lower at $1,025 a share on Friday.

Photo courtesy: Tesla