Examining the lithium price graph over the past year feels like riding a roller coaster, featuring towering ascents followed by hair-raising descents.
Following record highs in 2022, lithium prices have since dropped by approximately 80% at the time of writing. This decline persists despite the anticipated strong demand for electric vehicles (EVs) in the coming years.
In this article, we discuss factors that could impact the lithium price forecast in the upcoming years, drawing insights from experts.
Key Takeaways
- Oversupply of battery materials is likely to persist for the short term.
- Decelerating growth in EV sales in China may cap lithium demand.
- Low prices could force producers to cut lithium output, cushioning price fall.
- The emergence of alternative battery materials and energy storage technologies poses a potential headwind for lithium-ion batteries.
Lithium Price Forecast Summary
| Year | Forecast Range | Key Drivers |
| 2024 | Lithium Hydroxide: $15,870
Lithium Carbonate: $14.308,75 to $50,000 |
|
| 2025 | Lithium Hydroxide: $18,393/ton
Lithium Carbonate: $13.995,29-$20,000/ton |
Output reduction |
| 2026-2030 | Lithium Hydroxide
2026: $18,334 2027:$17,762 2028:$16,936 2029:$15,394 |
|
Overcapacity, Slowing EV Sales Knocks Lithium Prices in 2023
According to economic data provider Trading Economics, the price of lithium carbonate traded in China reached an all-time high of over 575,000 Chinese yuan ($79,637.67) per ton in December 2022. The price of lithium carbonate surged 81.7% in 2022 as lithium demand, fueled by widespread adoption of EVs, surpassed supply.
The International Energy Agency (IEA), in Global EV Outlook 2023, said total lithium demand reached 128kt in 2022, exceeding supply of 126kt. Lithium demand from EV manufacturing accounted for 60% of global consumption of the metal.
Lithium lacks an active futures market due to its relatively small trading volume. The primary price benchmarks for battery-grade lithium are spot prices observed in China, Japan, and Korea — considered the largest markets for seaborne lithium.
There are two lithium used in EVs: Lithium carbonate and lithium hydroxide.
Lithium carbonate, produced by extracting lithium-rich salt lakes or brines, is used to make cheaper but lower-density iron phosphate battery chemistries known as LFP.
Lithium hydroxide is predominantly extracted from the mining of spodumene ore. Lithium hydroxide has higher energy density and is often used in nickel, cobalt, and manganese (NCM) battery chemistries.
LFP batteries are commonly used in EVs in China, while electric cars in Europe and the U.S. mostly use the more expensive NCM.
China dominates the production of LFP batteries, which supply 40% of EV demand globally by capacity, according to IEA.
The lithium price opened 2023 at near a record high of over 519,500 yuan ($71.908) per ton, but it gave its gains as the year progressed despite robust global EV sales.
Global battery manufacturing has faced overcapacity primarily due to the rapid expansion of lithium iron phosphate (LFP) batteries in China.
Subsidies incentivized significant electric vehicle (EV) production in China, exacerbating this issue. Moreover, the growth in EV sales within China, which accounts for approximately 60% of new EV registrations worldwide, has slowed.
The recovery of China’s economy has been uncertain following the easing of strict COVID-19 pandemic restrictions after three years. This, combined with the phase-out of national subsidies to purchase new EVs, has contributed to dampening EV sales in the country.
Data from the IEA and World Economic Forum showed that new electric car registrations grew by 35% to reach eight million cars, slowing from 82% growth in 2022.
Furthermore, the rapid expansion has created overcapacity in EV batteries. Based on data from CRU, EV battery production reached 1 Terrawatt hour (Twh), exceeding the demand of 65 Gigawatt hours (GWh). About 52% of battery output in 2023 was from China’s LFP batteries.
Additionally, soaring lithium prices also prompted miners to increase production. Lithium output rose 44% year-over-year to 993kt lithium carbonate equivalent in 2023, according to data from the Australian Government’s Office of Chief Economist in its lithium price forecast released in March.
By the end of 2023, lithium carbonate price reached 96,500 yuan ($13,355.48)/ton, suffering a loss of 81%.
Drivers to Lithium Price Forecast 2024
The price of lithium carbonate in China has fallen about 45% in the past year, according to data from Trading Economics. However, the price has rebounded in the first five months, rising more than 14% year-to-date (YTD).
Will lithium prices manage to continue their recovery in 2024? We look into critical factors that will drive the lithium price forecast.
China EV Sales to Remain Strong
Despite the decelerating growth of EV sales, analysts expected China to lead sales in the global EV market. IEA projected China’s electric car sales to rise to about 10 million in 2024, accounting for about 45% of all car sales in the country.
Citing data from the China Association of Automobile Manufacturers, ANZ Research reported that the country’s EV production and sales remained strong in Q1 2024, growing by 28.1% and 35.3% y-o-y, respectively.
ANZ Research’s Daniel Hynes and Soni Kumari wrote in a note on 2 May:
“With more stimulus policies from local governments (including subsidies) to boost EV sales, EV production growth could be sustained over the balance of the year. This may come at the expense of internal combustion engine (ICE) cars.”
EV Remains the Primary Source of Lithium Demand
The Australian Government’s Office of the Chief Economist (OCE) anticipated that the increasing adoption of electric vehicles would predominantly fuel the growth in lithium demand.
The agency projected that demand from EVs would surpass half of the global lithium demand in 2022. It expected that global lithium consumption will grow by an average of 16% per year to reach 2,261 kt lithium carbonate equivalent (LCE) by 2029 from 1,219kt LCE in 2024.
In its outlook on 23 April, IEA predicted that global electric car sales could reach 17 million by the end of 2024, up from nearly 14 million in 2023.
Although sales remain predominantly concentrated in China, Europe, and the United States, the agency noted a surge in growth in emerging markets like Vietnam and Thailand. In these countries, electric cars represented 15% and 10% of total car sales, respectively.
Potential Trade Barriers to Limit EV Adoption
The Australian Government’s OCE that EV adoption could face downside risks from potential trade barriers from the United States and Europe against Chinese EVs.
Facing slowing sales at home, Chinese EV makers have been ramping up exports. Statista reported, citing data from the China Association of Automobile Manufacturers, that the country’s car exports surged to five million in 2023, from one to two million between 2020 and 2021.
The share of EVs in China’s car exports also increased to 25% in 2023 from 15% in 2021.
The growing exports of EVs from China have sparked concerns in both the United States and Europe. According to the International Energy Agency (IEA), new EV car registrations in Europe and the United States accounted for 25% and 10% of global EV sales, respectively, ranking them second and third after China.
Reuters reported on May 10 that U.S. President Joe Biden is poised to announce new tariffs on China, targeting critical sectors such as electric vehicles as soon as next week.
In March, the Biden administration announced its plan to investigate Chinese-manufactured smart cars, citing worries over potential threats to national security and personal privacy.
The European Commission has also launched an investigation into imports of Chinese battery electric vehicles (BEV) to determine whether Chinese EV cars benefit from illegal subsidies and whether the incentive could cause economic harm to the EU EV makers.
The Australian Government’s OCE said:
“Both the US and the EU are shifting towards establishing higher trade barriers against rising Chinese EVs exports, which could raise the cost of EVs for consumers and slow adoption.”
Emergence of Alternative Battery Chemistries
The surge in lithium prices and the domination of China in the EV supply chain have encouraged companies to find cheaper EV chemistries, which potentially reduce the use of lithium in batteries. According to Dutch lender ING, a battery could cost up to 40% of an EV value.
Sodium-ion is one of the battery chemistries that does not use lithium and companies are looking to develop it commercially for mass use. Unlike lithium, sodium is abundant and can be found worldwide in brines and rock salt.
Analysts at ING suggest that the widespread availability of sodium could reduce dependence on China, which currently dominates many aspects of the downstream EV battery supply chain, from material processing to the construction of cell and battery components.
The bank said:
“EV supply chains are expanding, but for manufacturing, China remains the key player in the battery and EV component trade.”
It added that China’s dominant role in battery metal supply chains and restrictions in other countries could potentially hinder the adoption of EV batteries.
Meanwhile, companies have begun producing and using sodium-ion batteries.
In November 2023, Swedish company Northvolt announced that it developed a sodium-ion battery. CEO and Co-Founder of Northvolt Peter Carlsson said sodium-ion batteries can be produced using local material and can provide a longer duration of energy storage compared to the conventional NCM and LFP chemistries at lower costs.
On March 6, 2023, The JAC Group’s joint venture with Volkswagen in China announced the release of the world’s first electric vehicle (EV) powered by a sodium-ion battery.
The Australian Government’s OCE said the current versions of sodium-ion batteries have low levels of energy density compared to lithium-ion batteries, as well as lower cycle life.
OCE wrote in its report:
“The history of battery technology suggests the performance of sodium-ion batteries may improve alongside other battery technologies. This would allow sodium-ion batteries to follow a similar commercialization pathway to LFP batteries: targeting consumers who prefer a lower cost product with acceptable performance over higher cost and higher performance options.”
Lithium Price Forecast 2024
| Source | Lithium Price Forecast 2024 |
| Australian Government’s Office of Chief Economist (lithium hydroxide) | $15,870/ ton |
| BMI (lithium carbonate China) | $50,000/ton |
| Trading Economics (lithium carbonate china) | Q2: CNY 108,080.5/ton ($14.956,75)
Q3: CNY 105,715 ($14.629,81) Q4: CNY 103,395 ($14.308,75) |
The lithium price forecasts for 2024 presented a mixed outlook, with most anticipating a potential easing in prices this year.
The Australian Government’s Office of Chief Economist, in its lithium price forecast 2024, predicted that lithium hydroxide could continue its downtrend this year, dropping to an average of $15,870/ton in 2024 from an estimated $51,395 in 2023.
Additionally, it anticipated the price of spodumene to fall to $1,139 per ton in 2024 from an estimated $3,812 per ton in 2023.
Similarly, Trading Economics also projected the price of lithium carbonate in China to trade at 108,080.5 yuan ($14,956.75) per ton in Q2 2024 before gradually decreasing to 103,395 yuan per ton ($14,308.75) in the final quarter of the year.
In contrast, BMI’s latest forecast on April 5 expected lithium carbonate price traded in China to average $50,000/ton in 2024, up from an average of $35,956.10 in 2023.
Without providing specific lithium price predictions, ANZ Research’s analysts Daniel Hynes and Soni Kumari wrote in a note on May 6 that the slowing expansion of EV sales, combined with surplus battery capacity in China, might dampen demand for battery metals.
Hynes and Kumari said:
“Lithium, cobalt and nickel look likely to remain oversupplied in the short term, but the response from producers in cutting output amid the low prices should limit the downside.”
Lithium Price Forecast 2025
| Source | Lithium Price Forecast 2025 |
| Australian Government’s Office of Chief Economist (lithium hydroxide) | $18,393/ton |
| BMI (lithium carbonate China) | $20,000/ton |
| Trading Economics (lithium carbonate china) | Q1 2025: CNY 101,130 ($13.995,29) |
For 2025, the available lithium price predictions were skewed to the downside.
BMI’s lithium price forecast for 2025 expected the soft, silvery, grey metal to average $20,000/ton, a 60% drop from the $50,000/ton forecast for 2024.
Data provider Trading Economics also anticipated lithium carbonate in China to drop to 101,301 yuan ($3.995,29) in the first quarter of 2025.
The Australian Government’s OCE, on the other hand, expected the price of lithium hydroxide to rise to $18,393/ton in 2025 from $15,870/ton in 2024.
Australian OCE wrote in its latest report:
“The fall in prices over 2023 has driven a reduction in production (particularly by some high-cost producers). This is likely to support a modest recovery in the lithium prices over 2024 and 2025.”
Lithium Price Forecast 2030
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What is the long-term outlook for lithium prices? Because lithium is not traded in active futures and is primarily traded in spot markets, anticipating its price in the long run is more difficult. There are very few analysts providing lithium price forecasts for 2030.
The Australian Government’s OCE anticipated the lithium hydroxide price recovery to be short-lived and start declining from 2026 as the emergence of alternative battery chemistries could add pressure on lithium-ion EV batteries.
According to the OCE, the price of spodumene was anticipated to drop to $1,090/ton by 2029 from $1,360/ton in 2026. It also expected lithium hydroxide price to fall to $15,394/ton in 2029 from $18,334 in 2026 due to the rising adoption of LFP batteries.
The Australian Government’s OCE wrote:
“The forecasts have a high degree of uncertainty, as new producers enter the market around the world and uneven trends in EV demand growth. Lithium prices could respond to unexpected developments in the pace of EV adoption and in other emerging uses, changes in battery technology and government policy, over the outlook period.”
On the other hand, ANZ Research’s Hynes and Kumari were upbeat on the long-term projection of critical minerals, lithium, nickel, and cobalt due to challenges to increase supply. They said:
“We see a strong long-term outlook. Supply still needs to increase 1.5-3.5 times over the next five years, a goal not easily achieved.”
In its latest commodities market outlook published in April, the World Bank also shared the optimism. The bank expected the prices of critical minerals, including lithium and cobalt, to rise in coming years as demand is anticipated to outpace supply growth due to the expanding use of energy transition, including for EVs, renewable power, and batteries.
The Bottom Line
Lithium prices may struggle to recover in the medium term as oversupply in the global battery capacity could persist for some time.
In the long term, while critical minerals, including lithium, will benefit from the continued expansion of EVs and rising demand for renewable energy, the metal’s gain is projected to be limited by the emergence of alternative battery materials.
New materials to power vehicles, such as sodium-ion developed by Northfolt or hydrogen, could reduce lithium usage in batteries.
Remember that forecasters and analysts can and do get their predictions wrong. You should always do your own research to determine whether lithium is a good investment that fits your financial goals.
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References
- Overall supply and demand of lithium for batteries by sector, 2016-2022 – Charts – Data & Statistics – IEA?(Iea)
- Trends in electric vehicle batteries – Global EV Outlook 2024 – Analysis – IEA?(Iea)
- Trends in electric cars – Global EV Outlook 2024 – Analysis – IEA?(Iea)
- Electric vehicle sales leapt 55% in 2022, with China in front | World Economic Forum?(Weforum)
- The world’s electric car fleet continues to grow strongly, with 2024 sales set to reach 17 million?(Iea)
- Resources and Energy Quarterly March 2024?(Industry.gov)
- Chart: Chinese Car Exports Continue to Soar as EV Share Grows | Statista?(Statista)
- New Biden tariffs on China’s EVs, solar, medical supplies due Tuesday – sources | Reuters?(Reuters)
- U.S. Department of Commerce?(Commerce)
- Commission begins investigation on electric cars from China?(Ec.europa)
- Can sodium-ion batteries replace lithiumion ones??(Think.ing)
- Northvolt develops state-of-the-art sodium-ion battery validated at 160 Wh/kg?(Northvolt)
- JAC Motors unveils world’s first sodium-ion battery vehicle | JAC Motors SA?(Jacmotors.co)
- Commodity…lithium Forecast 2024/2025?(Tradingeconomics)
Fitri Wulandari
Financial JournalistFitri has over 20 years of experience in financial journalism. She has contributed to various international media outlets, including Dow Jones Newswires, Bloomberg, and Reuters, before joining Techopedia. She spent the first 15 years of her career covering commodity and energy news, later transitioning to general financial writing. These days, she conducts interviews with industry players and analysts and reports on international conferences. Fitri holds a degree in International Relations, supporting her expertise in financial journalism. She occasionally serves as a guest trainer for journalistic training and as a moderator for panel discussions.
