Lithium supply can be grown without meaningful limit, if someone is willing to invest the capital for it. The problem is that the supply follows the capital investment with a ~5 year lag, and 5 years ago a little too much was invested, so now there is a glut.

As the actual extraction costs are relatively small compared to the initial capital outlay, and everyone needs to pay their investors, no-one can really cut production and everyone needs to sell at whatever price they can until someone goes bankrupt and capacity is reduced again. This is how relatively small mismatches in capacity can lead to major price fluctuations.