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Shares of Tesla (TSLA) were down 3.15% in today’s (November 29) session on a report from Reuters that up to 90% of its Model S and Model X vehicles showed defects during quality checks. (Tesla disputes the Reuters story.)

On the news, though, lithium stocks fell as well. The theory, I guess, is that if Tesla has more product defects and sells fewer cars, demand for lithium, used in making batteries of electric cars (and any other rechargeable device) would fall. For example, Albemarle (ALB), a lithium producer, fell 3.61% in today’s trading. (Albemarle is a member of my 12-18 month Jubak Picks Portfolio.) And Chile’s Sociedad Quimica y Minera (SQM), the world’s low cost producer of lithium, finished down 3.82%.

I’m going to use this dip in Sociedad Quimica y Minera to add the ADRs to my long-term 50 Stocks Portfolio tomorrow. The company has a 27% share of the global lithium market,

On November 22 SQM reported third quarter earnings of 43 cents per New York traded ADR, up from 21 cents per ADR in the third quarter of 2016. For the nine months of 2017 through September earnings came to $1.21, an ADR up from 75 cents an ADR in the first nine months of 2016.

The most important part of the company’s earnings release was the section on lithium prices. With demand increasing on growth in sales of electric vehicles and other end uses, prices in the third quarter rose above $13,000 a ton, up 8% from the second quarter. “We believe this pricing trend should continue for the remainder of this year, and through the beginning of 2018,” the company reported. (In the first nine months of 2016 lithium accounted for 29% of revenue and 61% of gross profit at SQM.)

The company’s key asset is its lithium deposits in Chile’s Atacama desert. These deposits have the highest global concentration of lithium and production from brines benefits from the high evaporation rates in the Atacama. The result is the lowest cost lithium operation in the world. (The company’s lease on these deposits from the Chilean government runs through 2030.)

Like other lithium producers SQM has been expanding production in the face of company forecasts that call for demand to double every five years. Global demand is projected at 208,000 metric tons in 2017, rising to between 500,000 and 650,000 metric tons by 2025 depending on the speed of growth in sales of electric vehicles. Most of that new production, at SQM and elsewhere, comes from the development of new mines (rather than brines.) SQM’s biggest new projects are in Argentina and Australia and look to have costs well below a long-term lithium price projection of $10,000  ton.

Potash of Saskatchewan (POT) is disposing of its 32% stake in SQM as a requirement for its merger with Agrium. (SQM produces both potassium (17% of revenue) and plant nutrients (32% of revenue).) So far bidding looks to be robust with interest from Chinese companies looking to expand their access to lithium to diversified global miner Rio Tinto (RIO).