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Wedged between iron and nickel on the periodic table, cobalt has suddenly emerged as the electric car killer.

The once-obscure metal, a critical part of batteries, has nearly tripled in price since last summer as concerns grow about whether there will be enough cobalt to meet demand.

The ingredients are certainly there for a shortage. Output is concentrated in the politically unstable Democratic Republic of Congo and refining is dominated by China. Demand is set to soar as companies from Tesla Inc. to Volkswagen AG ramp up production of electric vehicles.

With the price of cobalt hitting $30 a pound, investors have poured into shares of companies that mine or own rights to the metal. Canada’s Cobalt27 Capital Corp., which believes there is already a deficit in supply which will worsen, is up 162% this year.

“I don’t think automobile manufacturers are as concerned about price as availability,” says George Heppel, a consultant at materials research firm CRU International who says the shortage could peak in 2021.

Pedal to the Metal
Price of cobalt US 99.8% per pound as tracked by CRU International
THE WALL STREET JOURNAL
Source: CRU International

But the dreaded shortage of cobalt, which is used in the cathode of the batteries, is a bit more complicated than industry projections would suggest. As anyone who remembers the fears around so-called rare earths metals will agree, high prices have a way of boosting supply and reducing demand. With the cost of cobalt alone having risen to over $800 for some leading EV models—about as much as that of aluminum or plastic per vehicle—mother necessity is calling.

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Like cobalt, rare earths aren’t so rare. China’s move to restrict exports in 2010 exacerbated the perceived shortage, sending the prices of some varieties up 10-fold. Companies such as Molycorp, Rare Element Resources Ltd. and Quest Rare Mineral Ltd., which all had some connection to reserves, saw their shares surge based on supposedly rosy prospects. Since then, all have lost nearly all of their value.

Already, Mr. Heppel explains, other users of the metal, for example in the pigments industry, are searching for alternatives. Meanwhile, some batteries, such as a design by Tesla, use less of the metal. Lower-performing batteries use none at all, and those batteries’ capabilities may improve with technological tweaks.

Supply will react too. Companies that operate copper and nickel mines, where cobalt is co-produced, are targeting expansion, and there are some pure-play cobalt mines being planned that could start producing shortly after the projected shortage hits.

For electric vehicles, this looks more like a speed bump than a cliff.

—This column is part two of a series on the future of the booming world of batteries.

Write to Spencer Jakab at spencer.jakab@wsj.com