After complaining last year about surging prices for lithium, a metal used in electric vehicle batteries, Elon Musk says he’s now seeing “deflationary pressures” in commodities.

The Tesla Inc. chief executive made the remarks in response to questions on the EV maker’s earnings call. “Lithium prices went absolutely insane there for a while,” he said. Rising commodities prices had made it difficult to cut costs last year, but Musk said he was now “seeing what seems to be deflationary pressures.”

Chinese prices of lithium carbonate, a refined form of the metal, have halved from a peak in mid-November as supply pressure eased. Nickel and cobalt, also used in batteries, have dropped as well.

The reduction in commodity prices translates into thousands of dollars on a per vehicle basis, Karn Budhiraj, vice president for supply chain at Tesla, said on the call. To lock in the lower costs, the company is extending some fixed-price contracts with suppliers through the end of this decade, he said.

Still, Tesla reported smaller profits in the second quarter, which were mostly in line with Wall Street forecasts, and said it will probably keep slashing prices of its EVs if interest rates keep rising.

Tesla said it had broken ground on its own lithium refinery in Texas earlier this year. Progress on the plant, as well as a cathode facility, were going well, Musk said on the call.