A recent decline in commodity prices would only help Tesla (NASDAQ:TSLA) Inc’s slashed margins in the second half of the year, indicating additional short-term suffering for the electric-car manufacturer that has been lowering prices to boost sales.

According to Tesla’s chief financial officer Zachary Kirkhorn, the cost of raw materials for batteries has been a significant drag for the past two years. The company is “still at the maximum pain for commodities in our cost structure.”

The remarks dashed hopes that Tesla, whose margins dropped to a more than two-year low of 19.3% in the first quarter, missing the average market estimate of 22.4%, would benefit from the drop in commodity costs this year.

Six price cuts by Tesla this year are expected to increase competition from established automakers like Ford Motor (NYSE:F) Co and upstarts like Lucid Group Inc.

The cost of battery metals like cobalt and lithium, which are key components of EV batteries, has decreased by about 50% and 40%, respectively, so far this year. Since its March 2022 peak, nickel has fallen by almost 50% and has lost roughly 20% of its value this year.

Analysts blamed long-term contracts for the delay in gains from decreased battery material prices, particularly for lithium, which is purchased at a price that differs from spot prices.

With the exception of lithium, lowering costs for many of the other raw materials that Tesla uses should contribute to total cost savings, according to Morningstar analyst Seth Goldstein.

Due to increased economic uncertainties and a scheduled suspension of subsidies in China, the largest and fastest-growing market in the world, lithium prices have decreased following an increase in mining output and a decline in EV demand.

Analysts predicted that prices could drop even more as EV demand drops. The slide has even spurred unusual discounts from Chinese battery giant CATL, a Tesla supplier.

According to Rystad Energy, the global lithium market shortfall will decrease this year from 76,000 tonnes of lithium carbonate equivalent (LCE) to roughly 20,000 to 30,000 tonnes LCE.

Tesla would gain from it as its massive factories in Austin and Berlin increase production.

On a conference call following the earnings release, Musk noted that the cost of lithium has decreased dramatically.

Elon Musk stated that the firm will put a higher priority on sales growth than profit, which caused Tesla shares to decline 8% in premarket trading and drag automakers’ stock from Europe to the United States.