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Tesla decreased their prices in some cases by 30% this year, yet it hasn’t seemed to be enough to increase demand. Lithium can rarely be obtained by investors in its physical form but the metal can be traded effectively in other ways. One can buy shares in companies that are involved with lithium mining and production. Lithium is traded as both Lithium Hydroxide and Lithium Carbonate. Besides being used extensively in the medical and psychiatric fields, lithium also offers vast applications in other areas.

Get updates on the IEA’s latest news, analysis, data and events delivered twice monthly. Assuming we move to a 100% EV world the two charts below summarizes the massive demand surge for key EV metals. Note that lithium (35x) and then flake graphite (17x) have by far the two biggest demand pulls.

The China lithium carbonate spot price has been stabilizing since December 7, 2023 and this past 2 weeks has bounced higher from CNY 95,500 to CNY 97,500. First, a rare slowdown in EV demand in the pivotal Chinese market has taken the markets by surprise. According to the China Passenger Car Association (CPCA),  sales of new energy vehicles, including pure battery EVs and plug-in hybrids, fell 6.3% in January, a sharp contrast to a blistering 90% growth in 2022.

  1. The electric car industry is rising like a phoenix, with Apple and Google poised to launch their own versions soon.
  2. Lithium sellers such as Ganfeng Lithium, the Albemarle Corporation, and others were so swamped with orders they were holding auctions, which routinely pushed prices upward.
  3. We disagree, and continue to forecast a price rebound as strong demand growth outpaces supply, leading to a deficit in 2024.
  4. Various analysts have estimated that EVs will achieve cost parity with ICE vehicles when battery costs fall to ~$100 per kilowatt-hour, which could happen in just a few years and mark a major win for the global clean energy revolution.

Johan August Arfvedson of Stockholm analysed the mineral when he realized it contained an unknown metal that was a new alkali and a version of sodium. The metal’s name is derived from the Greek word “lithos” meaning stone. Also in 2012, the automotive sector accounted for 14% of the Li-ion battery market. By the end of 2016, this will grow to as much as 25% by the end of 2016.

Spot Prices versus Retail Prices

Investors can draw their own conclusions on what scenario (base case or high case demand) will likely play out. In 2022 we saw what happens when EV demand surges and in 2023 we saw what happens when supply surges. The chart below shows what happened to iron ore when China accelerated their industrialization and urbanization. The commodity remains extremely valuable due to its essential roles in the fields of medicine, technology, and to investors looking to add a sought-after commodity to their portfolio. Two of the world’s major lithium producers are Australia and Chile. The metal is found in trace amounts in many rocks and mineral water but is more abundant in minerals such as petalite, spodumene, lepidolite, and amblygonite.

Technology cost trends and key material prices for lithium-ion batteries, 2017-2022

Based on moat and valuation, our top lithium stock picks are Albemarle, Livent LTHM, and Lithium Argentina LAAC, all of which trade in 5-star territory at less than 50% of our fair value estimates.

What these things all mean is that the demand for lithium-ion batteries will rise even further. The price of lithium carbonate is up by 47% from 2015 and the year 2017 will see increased sales of pure electric cars. Add the fact that Li-ion batteries are also used for mobile devices such as smartphones, tablets, laptops, and other wearable devices, and the demand for the commodity will surely increase as well. The September 2023 chart below from Macquarie shows the various Chinese lithium producers cost of production. Back in September 2023 the lithium carbonate spot price was at ~US$21,000/t (blue-dotted line), a price where the Chinese non-integrated spodumene producers were starting to become unprofitable. China lithium carbonate spot prices have fallen ~82% from their 2022 high and are now well below the marginal cost of production.

This mineral us usually white to grayish in color, but when it’s thrown into a fire it flares into bright red. The irony is that we are near the beginning of an EV metals supercycle where demand for EV metals will potentially skyrocket over the next decade, assuming we continue to move towards electrification of global vehicles. Commodities fluctuate all the time, and over-investment in production is hardly a unique story.

Countries in the developing world have been able to tap into vital new revenue streams even as the price of lithium was pushed downwards. While in the short term, this price crash is a boon for those who previously struggled to purchase lithium and some green industries that consume lithium, in the long term, this price collapse will prove damaging to the green energy industry. Fears over another crash, current capital losses, and a lack of production increase even when input prices are at rock bottom may stymie efforts to increase lithium production for years. Unfortunately for all, this vision has been interrupted by some of the perennial enemies of the orderly market – human greed and poor planning. Just over a year ago, lithium prices were sitting at nearly $80,000 a ton in December 2022. The U.S. government was so worried about the metal’s price and its impact on advanced technologies it enacted a comprehensive supply review.

Market Trading

Assuming we move to a 100% EV world the demand surge for EV metals will be virtually unprecedented in history. H2, 2025 may see the next surge in EV sales as cheaper EVs become available saxo bank broker review in the West from BYD, Tesla and others which may lead to the next lithium price surge. Just last week BYD launched the Dolphin Mini (Seagul) in South America starting from US$20,100.

2022 material prices are average prices between January and March. Lithium demand is mostly driven by EV adoption and to a lesser degree energy stationary storage (“ESS”) adoption. The chart below forecasts that if EV adoption and ESS surges (top line) we will get large lithium deficits again this next decade.

In the late 1800s, it was used to treat mania with such positive results that lithium is still used in psychiatry today. Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

Price History of Lithium

On the periodic table, it belongs to Group 1 (Ia) which holds the other alkali metals hydrogen (H), sodium (Na), rubidium (Rb) potassium (K), cesium (Cs), and francium (Fr). It is known as a soft substance with the lowest density of all metals (0.534 g/cm3). We see lithium stocks as undervalued as the market expects a supply surplus, but we disagree. The Trend Investing forecast below shows peak EV sales acceleration (in terms of number of units sold) should occur from about now to 2035. As the chart shows, CAM manufacturers have been destocking at a fast pace, once battery inventories return to normal level then orders should start to flow upstream again…

Lithium has some substitution risk from sodium-ion batteries (low end EVs & energy stationary storage (~10% of demand could be taken by sodium-ion) and flake graphite from artificial graphite. Substitution may potentially cause the demand numbers below to be a bit lower. A degree of stability is necessary in order to rescue the lithium market. Prices of lithium need to be low enough that consumers, such as battery manufacturers, can make a profit, but high enough to encourage suppliers towards long-term expansion and investment.

Environmental advocates ignore the market (often focusing on political or social campaigns) at their own peril. To paraphrase Pericles, some environmentalists may not be interested in the market, but the market remains interested in them. Our responsive widgets and charts scale to nearly any display size. The author or authors do not own shares in any securities mentioned in this article.

What separates lithium, and what makes this situation so dangerous, is the intense geopolitical competition lithium is subject to, the regulatory environment lithium interfaces with, and lithium’s role in combating climate change. In Australia, lithium comes from mining ores of other minerals. Chile and Argentina extract lithium from the brine of underwater lakes. The remaining saline solution is processed to extract the lithium, usually by electrolysis.